Annual Report
For the period ending 31 March 2020
ikeGPS Group Limited
TABLE OF CONTENTS
Chairman's & CEO's Report
FY20 Results Highlights
Management Team
Board of Directors
Corporate Governance
Disclosures
Financial Statements
Directory
4
8
21
25
27
33
39
80
3
Chairman's &
CEO's Report
FY20 - Year in Review
Performance
FY20 was a busy and productive year for our business with
continued growth and improvement across all key metrics. Our
core target market has also continued to develop positively,
being tier-1 U.S. communications companies, electric utilities
and their engineering service providers. Success within this
market is the key long-term value driver for our business.
In terms of financial performance, recognised revenue of $9.8m was
approximately 23% higher against the FY19 prior comparative period (PCP)
of $8.0m. Gross margin in FY20 grew to $7m, 30% higher against PCP (FY19
$5.4m), reflecting the continued shift to the higher quality revenue from our IKE
solution. Consolidated gross margin percentage was approximately 71%, an
improvement against PCP of 67%. Operating cash flow performance improved
to approximately ($1.1m) (against PCP of ($4m)). Our net loss after tax for
the period was $5.7m, against PCP of $5.1m. We concluded the period with
$5.9m of total cash and receivables, noting that a subsequent event was an
oversubscribed capital raise from new and existing ASX and NZX parties of
$19.7m to support our growth plans.
4
Market tailwinds
As we have consistently communicated the key value driver
for IKE is the development of IKE solution sales across target
accounts, typically the largest communications companies
and electric utilities operating in the North American market.
From a market timing perspective, the pace of investment
into fiber networks and 5G has continued. The U.S. fiber
market is estimated to be at year two or three of a seven
to ten-year investment super-cycle exceeding $300B, and
with more than 200 entities competing to deploy networks.
An additional large market tailwind has emerged relating
to 5G, the next generation mobile technology – expected
to represent an additional $50B of network development
– much of it on power poles. Usage of the IKE solution
materially improves productivity across the process to
deploy a fiber network development or for 5G site workflow
processes. We are pleased to be positioned in front in these
very large macro market factors.
IKE Analyze, materially improves productivity for
fiber network development and 5G site assessment
workflow processes
Product development milestones
The transition to the IKE Analyze business model was
initiated in FY19 and was matured through FY20. Adding
to our historical model of selling field tools and software
subscriptions, IKE Analyze leverages our cloud-based pole
software platform so that IKE can deliver significantly more
value to customers via engineering reports and analysis.
The depth and specificity of the IKE Analyze offering for
distribution asset projects is important and provides an
opportunity to access materially larger customer contracts.
As a result of this product transition, approximately 70% of
FY20 revenue was derived from either recurring subscription
or transaction sources.
Successful acquisition
We acquired certain assets of PowerLine Technology Inc.
(PLT) in the period, one of the leading structural analysis
software companies in North America. Post-acquisition
activities have been positive with all major PLT customers
renewing their annual software licenses post-acquisition.
IKE Analyze cross-sell opportunities with PLT customers
have also emerged.
5
Brand development
Through FY20 we continued important work
establishing our brand and customer experience
within the Communications and Utility segment. IKE
is a poles business, focused on people, process and
technology. Our objectives are to create a depth of
customer engagement and experience that is the
best in our industry. And our vision is to be the Pole
Standard via the IKE Record and for the term ‘IKE” to
become a common verb across our market.
Team development milestones
From a director perspective, we were pleased to
welcome Mark Ratcliffe onto IKE’s Board at the
beginning of January 2020. Mark brings leadership
experience from positions across our targeted
industries. Mark’s past roles include CEO of Chorus,
Chief Operating Officer Wholesale & Technology of
Telecom New Zealand (now known as Spark), and
Chief Information Officer of Telecom New Zealand
(now known as Spark) Mark also has considerable
governance experience. Among other directorships he
currently serves as a non-executive board member of
2Degrees Mobile, the highly successful new entrant into
the New Zealand mobile market, and First Gas.
From a leadership team perspective, through the year
we added several strong new people. This included
U.S. based Chris Ronan as Chief Marketing & Brand
Officer, who has had former consulting and marketing
leadership roles with Dell, Ford Motor Company,
Southwest Airlines, and Emirates Team NZ. Also
U.S. based Norwood Keel joined as SVP Product,
who has had former director-level roles at Microsoft
and Trimble.
6
Outlook
FY20 saw record sales from the IKE solution, with
$9.2m revenue generated. Most importantly however
was the in-market progress with the sales & delivery
of IKE Analyze within some large target accounts. Our
vision is to put IKE products and technology at the
centre of every pole transaction.
Looking to FY21 our plan remains consistent with that
over the past 24+ months. We are squarely focused
on building and selling a poles platform into the North
American Communications & Electric Utility sector that
speeds up network development. As detailed above we
believe that market timing is optimal notwithstanding
that Covid still presents some unknown risks. The
pace of investment into fiber networks and 5G
mobile networks is continuing and usage of the IKE
solution shows that against existing work practices
IKE increases efficiency for field engineering by
approximately two times and increases efficiency for
back-office engineering by approximately five times.
As noted above, after the end of the FY20 period, we
concluded an oversubscribed capital raising of $19.7m.
This new capital will support our plans to grow our
team and our products, and ultimately support our
goal to build decades-long relationships with target
customers. We are still in the early phases of serving
these very large infrastructure groups and our focus on
these types of large businesses will continue to bring
some timing uncertainty and associated risk - but we
are optimistic about the potential to deliver a strong
FY21 performance. We feel IKE is as well positioned
as it has been. Most broadly, we have confidence in
the substantial and continuing growth opportunity for
IKE in the medium and long term due to large macro-
market tail winds. And we are winning customers
because our solution enables networks to be deployed
faster, more cost-effectively, and with a higher quality
data standard.
Rick Christie
Chairman
IKE GPS Group
Glenn Milnes
CEO & Managing Director
IKE GPS Group
7
FY20 Results Highlights
+ Record revenue growth in the core Communications & Electric Utility segment:
+ Total recognised revenue FY20 of approximately $9.8m (23% growth against PCP).
+ Gross margin growth:
+ Record gross margin FY20 of approximately $7.0m (30% growth against PCP).
+ Gross Margin percentage improved to 71% (against PCP of 67%).
+ Improved operating cash flow:
+ Operating cash flow of approximately ($1.1m) against PCP of ($4.0m).
+ Operating loss for the year was approximately ($5.6m) against PCP of ($5.1m)
+ Record sales into the U.S. Communications and Electric Utility market, with approximately $9.2m
revenue including;
+ $2.8m revenue generated from annual software subscriptions and $3.2m from IKE Analyze (approximately
125% growth in IKE Analyze revenue against PCP)
+ Cash and receivables:
+ IKE ended the period with total cash & receivables of approximately $5.9m.
+ Transition to the IKE Analyze business model was continued in FY20
+ As a result approximately 70% of FY20 revenue was from recurring subscription or transaction sources.
8
+ The focus continues on two large markets, specifically speeding the pre-construction process in
the Communications and Electric Utilities segment in North America.
+ Market timing is optimal.
+ Multiple customer proof points.
+ With account acceleration opportunities.
+ Operating momentum.
+ Across pipeline, brand, customer experience, and process efficiency.
+ The right people.
+ Leadership, pole expertise, and governance in place so to lead our niche. The period included the
appointment of Mark Ratcliffe as non-executive director, the former CEO of Chorus and former CIO &
COO of Spark (formerly Telecom NZ).
9
Positive
Overall Momentum
10
Positive Trending of Revenue,
Gross Profit, and EBITDA
IKE Group
Trended Revenuet Gross Proftt
and Operating Cash Flow ($000)
Revenue
Gross Margin
Operating Cash Flow
$10,000
$5,000
- -
- $5,000
- $10,000
FY17
FY1(cid:10)
FY1(cid:15)
FY(cid:19)(cid:18)
Particularly within the
Core Communications
and Utility Segment
Communications &
Utility Segment
Revenue mix; transition by year
Transactions &
subscription revenue
One-time revenue
$$(cid:2)(cid:25)(cid:2)(cid:2)(cid:2)(cid:25)(cid:2)(cid:2)(cid:2)
$&(cid:25)(cid:2)(cid:2)(cid:2)(cid:25)(cid:2)(cid:2)(cid:2)
$!(cid:25)(cid:2)(cid:2)(cid:2)(cid:25)(cid:2)(cid:2)(cid:2)
$(cid:29)(cid:25)(cid:2)(cid:2)(cid:2)(cid:25)(cid:2)(cid:2)(cid:2)
$*(cid:25)(cid:2)(cid:2)(cid:2)(cid:25)(cid:2)(cid:2)(cid:2)
$(cid:24)(cid:25)(cid:2)(cid:2)(cid:2)(cid:25)(cid:2)(cid:2)(cid:2)
$(cid:20)(cid:25)(cid:2)(cid:2)(cid:2)(cid:25)(cid:2)(cid:2)(cid:2)
$(cid:14)(cid:25)(cid:2)(cid:2)(cid:2)(cid:25)(cid:2)(cid:2)(cid:2)
$P(cid:25)(cid:2)(cid:2)(cid:2)(cid:25)(cid:2)(cid:2)(cid:2)
$$(cid:25)(cid:2)(cid:2)(cid:2)(cid:25)(cid:2)(cid:2)(cid:2)
$
FY18
FY12
FY65
11
There has been exponential growth in
the usage of IKE Office platform.
POLE PHOTOS CAPTURED
NINE CUMULATIVE CALENDAR QUARTERS
20m
18m
16m
14m
12m
10m
8m
6m
4m
2m
0m
12
Q1
2018
Q2
2018
Q3
2018
Q4
2018
Q1
2019
Q2
2019
Q3
2019
Q4
2019
Q1
2020
8,100
IKE Users since
IKE4 Launch
312
Registered Companies
in IKE Ecosystem
Delivering dramatic productivity
gains to our customers.
20.8 Million
3.3 Million
Photos
of poles to date
75%
Assets
in IKE Office
0
Reduce
personnel requiring field visit
Zero
revisits to the pole
2x Faster
8x
Improve
workflows from end to end
Reduce
permit request rejections
13
Creating More Value
and Building Deeper
Customer Relationships
+ IKE now delivers more value to every customer;
+ speeding up multiple aspects of the network assessment & make-ready-
engineering process.
+ IKE Analyze demands deeper, longer term customer (& revenue) relationships;
+ with the IKE platform becoming embedded in customer workflows.
+ greater revenue from every IKE solution in use vs. IKE’s historical business model;
+ IKE’s revenue mix evolves favorably;
+ becoming substantially weighted towards ongoing transaction & subscription revenue.
+ Market timing is optimal;
+ with the potential to play a role in speeding up network deployment processes in
markets experiencing investment super-cycles;
+ Fiber network deployment;
+ >$300B expected investment in the U.S. over the next 5+ years.
+ Utilities network hardening initiatives.
+ >$10B per annum expected investment in coming years.
+ 5G mobile network deployment;
+ Expected to grow to a market investment size >$50B per annum by 2025.
14
Working with
the biggest names
in the business
15
“
IKE speeds network
pre-construction for
two large markets
Meeting Market Demand
Timing is optimal for:
Communication Infrastructure
Providers (CIPs)
Pain point IKE solves:
Bring networks and services online faster
Standardize costs & data Standard across multiple geographic markets
Applications:
Fiber network deployments
5G network deployments
Market opportunity for IKE:
Bottom Up:
>$225m revenue opportunity over 5 years from the largest 15 players in the U.S.
>200 CIPs in the North American market
Top Down
>$300B forecast investment into fiber networks in the U.S over next 5+ years
>$50B forecast 5G network investment
16
“
IKE speeds network
pre-construction for
two large markets
Meeting Market Demand
Timing is optimal for:
Communication Infrastructure
Providers (CIPs)
Pain point IKE solves:
Bring networks and services online faster
Standardize costs & data Standard across multiple geographic markets
Applications:
Fiber network deployments
5G network deployments
Market opportunity for IKE:
Bottom Up:
Top Down
>$225m revenue opportunity over 5 years from the largest 15 players in the U.S.
>200 CIPs in the North American market
>$300B forecast investment into fiber networks in the U.S over next 5+ years
>$50B forecast 5G network investment
Electric Utilities
Pain point IKE solves:
Sharply increasing pole attachment permit requests
Require a Standardized way to assess if poles are compromised
Applications:
Joint-use requests from CIPs
Network hardening to protect against storm and fire risk
In some cases, building their own fiber networks
Market opportunity for IKE:
The largest potential market for IKE in the long term;
>3,200 electric utilities in North America
>$750M per annum Total Addressable Market
IKE expects that this segment will develop more slowly than the CIP
and Engineering Service Provider market
Engineering Service Providers (force multipliers for IKE)
Pain point IKE solves;
Market opportunity for IKE;
Need to maximize efficiency and
profits. Typically doing >50% of the
network development work for the CIPs
and Electric Utilities.
>1,000 engineering groups in the U.S.
Use of IKE tools for field engineering
drives asset data back to the IKE
Analyze transaction platform.
17
What do we do?
An end-to-end workflow and revenue model
A combination of cloud based software, field tools, and field software to deliver detailed pole
reports to our customers.
IKE STACK
IKE Field Tools & Software
IKE Cloud Software
The Pole Analysis Platform
Detailed Reports
Used by Customers
reports
Annual subscription
revenue per device in the
field and upfront revenue
for device sales
Per Pole Analyzed;
Transactional Revenue
Field Operations
Pole Load
Analysis
(Digital Twin)
Pole Preview
Assessment
Make Ready
Recomm.
IKE
Report
PLA
Report
MRA
Improvements
Pass/Fail
Maps
IKE Office
Cloud
Database
IKE Photo
Records
Permitting
18
ikeGPS FY20 Annual Report Analysis Levels Explained
IKE Analyze offers three levels of analysis to support
a fiber or 5G mobile network deployment.
HOA
Height of Attachment
+ Height of Attachment
+ Route Surveys
+ Pole locates
+ Joint Use
+ Billing compliance
+ Network confirmation
PLA
Pole Loading Analysis
+ Pole Loading
+ Pole integrity
+ Clearance Analysis
+ NESC compliance
MRA
Make-Ready Assessment
+ Make-Ready Adjustments
+ Fiber deployments
+ Design Suggestions
+ Network hardening
19
Management Team
20
Management Team Glenn Milnes
Chief Executive Officer & Managing Director
Leon Toorenburg
Chief Technology Officer
Glenn Milnes is the CEO and managing director at ikeGPS,
where he is accountable for the company’s overall strategy,
performance, and growth. Glenn joined ikeGPS after
more than a decade of leadership roles at international
communications group, Cable and Wireless International,
London, and at venture capital firm No 8 Ventures.
Before entering the business world, Glenn played
professional cricket in New Zealand, England, and The
Netherlands, representing New Zealand at various levels.
Glenn holds an MBA with distinction from Imperial College
London, a Bachelor of Science with first-class honors
from Oxford Brookes University and a Bachelor of physical
education from the University of Otago.
Leon Toorenburg is the Chief Technology Officer at ikeGPS,
where he leads the research department to investigate
how to leverage new technologies to simplify and speed up
ikeGPS customers’ workflow.
Leon is the founder of ikeGPS and has been instrumental
in the development of all ikeGPS’ products. He holds
numerous U.S. and international patents on measurement
technologies. Leon holds a Bachelor of Science from Victoria
University and Bachelor of Engineering with honors from
Canterbury University.
Mike McGill
Senior Vice President, Utility & Communication Business Unit
Chris Birkett
Chief Operating and Financial Officer
Mike McGill is the Senior Vice President of the Utilities
& Communication business unit at ikeGPS, where he
is responsible for delivering collection, analysis, and
management solutions for customers focused on
distribution assets.
Chris Birkett is the Chief Operating and Finance Officer at
ikeGPS, where he is responsible for ensuring the company
has the correct settings for growth and profitability. A key
part of his role is supporting other team members to unleash
the value of our products for our customers.
Prior to joining ikeGPS, Mike served as the senior vice
president of sales at Navagis and spent six years at
DigitalGlobe in director- and vice president-level positions
for the spanned commercial and defense segments.
After leaving DigitalGlobe, Mike leveraged his intelligence,
surveillance and reconnaissance experience by co-founding
a drone company, now known as Silent Falcon UAS. Mike
earned his degree in economics from the University of Utah.
Prior to joining ikeGPS, Chris held CFO and Managing
Director roles at General Cable New Zealand Limited, General
Cable Asia Pacific, and Rock Shox (US). Chris is a Chartered
Accountant (CAANZ). Chris received his degree from Victoria
University of Wellington.
21
Management Team Malcolm Young
Senior VP Structural Analysis / Head of PoleForeman
Norwood Keel
Senior VP, Sales
As VP of Structural Analysis Malcolm is responsible for
the development and delivery of IKE’s structural analysis
products and for the quality control function for IKE Analyze.
Prior to joining IKE, Malcolm was founder and president of
PowerLine Technology – the developer of IKE’s PoleForeman
product – where he built the company to the position of
having some of the largest investor-owned utilities in North
America as embedded customers. Before that Malcolm held
senior engineering management positions at Alabama Power.
Malcolm is a qualified structural engineer and is considered
to be one of the preeminent thought leaders in the U.S.A.
market related to power poles and a structural analysis
As VP of Product Norwood leads is responsible for product
strategy, roadmaps, and platform at IKE. Norwood’s
prior roles include as Director of Product Development
at Microsoft Research - where he built and launched a
cloud-based 3D mapping and photogrammetric solution,
as Director of Strategic Development at Trimble - where he
led the development of a 3D asset management solution
for electric utilities and for Trimble’s field surveying cloud
solution, and as VP/GM of Digital Solutions at Vaisala -
where he led a global business unit delivering cloud-based
decision software from weather sensors and data. Norwood
holds an MBA from the University of Colorado and a B.S. in
Mechanical Engineering from North Carolina State University.
Chris Ronan
Chief Marketing Officer
Chris is IKE’s Chief Marketing Officer where he is accountable
for IKE’s marketing, communications, brand, and customer
experience. Prior to joining IKE, as the founder & president of
two leading North American digital marketing agencies, Chris
led marketing and brand initiatives for some of the world’s
leading companies including Ford Motor Company, Dell, Air
New Zealand, Emirates Team New Zealand, and SouthWest
Airlines among others, helping these businesses shape their
identities and tell their stories. He has a [Arts] degree from
Midwestern State University. Before entering the world of
commerce Chris was a semi-professional road cyclist.
22
Management Team Teamwork During Covid-19
Day-in-the-Life tele-conferenceing
As IKE monitored and responded to COVID-19, initial focus was to ensure the health and wellness of the IKE team, families,
and community. The team was early to adopt a work-from-home strategy to tactically ensure ongoing success of customer
initiatives.
Due to the cloud-based nature of our systems and methods of delivery, the transition of the IKE team was smooth. Team
members were creative in how they utilized remote working systems to engage with customers in new ways. IKE continues
to support work-from-home kits to make audio, video, and general home office needs as clear and professional as possible;
tactics such as these are part of our culture of delivery in customer success.
23
Board of Directors
24
Board of Directors Rick Christie / (MSc (Hons) Chemistry)
Chairman and Independent Director
Glenn Milnes / (MBA (Dist.), BSc (Hons), B PhD)
CEO & Managing Director
Rick Christie is the former Chairman of Ebos Group, where
he was Chair through much of its growth to become a >$3B
business today. He has experience on a number of other
major boards, including TVNZ. Rick was previously CEO
of investment company Rangatira Ltd and had 20 years’
executive management experience in the international oil &
gas industry.
Bill Morrow
Non-Executive Director
Bill was most recently CEO of NBN co., where he led the
build of Australia’s $40B universal broadband network
that has connected more than 6.5 million homes and
businesses. Prior to that, he has held positions including
CEO of Vodafone Europe, President of Vodafone KK Japan,
and CEO of Pacific Gas and Electric. Bill has considerable
governance experience, serving as a board member for eight
years at Broadcom Inc. and Openwave Inc. among other
directorships.
Prior to leading ikeGPS, Glenn Milnes previously held senior
executive, strategy and corporate development positions with
No 8 Ventures and Cable & Wireless International.
Dr. Bruce Harker / (PhD Electrical Engineering,
BE (Hons))
Independent Director
Bruce is currently Director of H.R.L. Morrison & Co’s Energy
Group and is also Chairman of ASX listed Tilt Renewables.
Among other directorships, he was previously Chairman of
NZX listed TrustPower and also Z-Energy.
Alex Knowles
Director
Mark Ratcliffe
Independent Director
Alex has investing and operating experience with
international companies in the information technology and
transportation industries. Based in Los Angeles, He was
formerly Chief Operating Officer of the largest international
freight forwarder and small parcel consolidator in the U.S.
Mark joined IKE most recently from Chorus, where he was
its CEO leading the deployment of New Zealand’s national
fiber network. Prior to Chorus Mark was CIO and COO of
Spark (formerly Telecom NZ). His other governance roles
include as non-executive director of 2Degrees Mobile and as
Chairman of First Gas.
Fred Lax / (MSEE AND BSEE)
Independent Director
Fred Lax is an executive leader with extensive global
experience in the telecommunications industry and related
technologies. Based in California, he is a former director of
NASDAQ listed Ikanos Communications Inc. (acquired by
Qualcomm Atheros), and former Chief Executive Officer and
President of NASDAQ listed Tekelec Inc.
25
Board of Directors Director's Report
26
Director's Report ikeGPS Group Limited (“the Group”) is a New Zealand company. Its shares are quoted on the New Zealand Stock
Exchange (NZX) and Australian Securities Exchanges (ASX). The Group became a foreign exempt listed issuer on
the ASX in September 2016.
On our website: https://ike4.ikegps.com/company/ you will find the following corporate governance documents
referred to in this section:
+ Constitution
+ Corporate Governance Code
+ Code of Ethics
+ Diversity Policy
+ Securities Trading Policy
+ Continuous Disclosure Policy
+ Nominations and Remuneration Committee Charter
+ Audit and Risk Management Committee Charter
Under NZX Rule 10.4.5, NZX has a set of principles and recommendations, the NZX Corporate Governance
Code that listed companies must report against. The overarching purpose of the NZX Code is to promote
good corporate governance. The Board considers that, as at 31 March 2020, the Company complies with the
recommendations set by the NZX Corporate Governance Code, except where it deems alternative measures are
more appropriate as disclosed.
Ethical Behaviour
Code of conduct
The Group has a Code of Ethics, setting out the ethical and behavioural standards expected of Directors and
staff. Directors and staff are also expected to uphold the Group values.
Whistle blowing
The Group Code of Ethics includes specific direction on action to be taken by a person who suspects a breach
of the Code.
Avoiding conflicts of interest
The Board is updated at each meeting on changes in Directors’ interests and any potential conflicts. The
register records relevant transactions and our disclosures of interests. A current listing of Directors’ interests is
found on page 34.
Trading in securities
The Groups Directors are restricted from trading in the Groups shares under New Zealand law and by the Groups
Security Trading Policy. The policy details “blackout periods” where trading is forbidden, as well as a process for
authorisation at other times.
27
Corporate Governance Board composition and performance
Board composition
The structure of the Group’s Board and its governance
arrangements are set out in the Company’s
Constitution, and in the Board’s written Charter
setting out the Board’s roles and responsibilities. The
management and control of the business is vested in
the Board. The Charter sets out the matters reserved
for our decision making including (amongst other key
matters) the establishment of the Company’s overall
strategic direction and strategic plans.
Management is responsible for implementing the
strategic objectives, operating within the risk appetite
the Board has set, and for all other aspects of the day-
to-day running of the Company.
The Board delegates the day-to-day leadership
and management of the Company to the CEO. The
delegations are set out in the Board Charter and in a
Delegated Authority framework, which also sets out
authority levels for types of commitments that the
Company’s management can make.
The Board consists of six non-executive Directors and
one executive Director.
1. Rick Christie (Independent, Non-executive Chairman,
Remuneration Committee),
2. Bruce Harker (Independent, Non-executive Director, Audit and
Risk Committee, Remuneration Committee),
3. Alex Knowles (Non-executive Director),
4. Bill Morrow (Independent, Non-executive Director),
5. Fred Lax (Independent, Non-executive Director, Audit and Risk
Committee Chairman),
Board meetings
Between 1 April 2019 and 31 March 2020, we held
eight Board meetings. All meetings were attended
by all Directors (or committee members) apart from
one Board meeting in March where Bruce Harker
was absent.
Board composition
The Board formally considers its composition each
year at an annual performance review. The Directors
believe the respective skills and experience of
individual Directors to be complementary, appropriate
for the Company, balanced and reasonably diverse.
The Group’s Directors have expertise and experience
in strategy development, executive leadership,
acquisitions and divestment, technology, data,
corporate responsibility, governance, legal and
regulatory matters, public policy, and finance (including
the assessment of financial controls). In accordance
with the applicable listing rules, all directors are re-
elected within 3 years or on the third annual general
meeting following their appointment.
Diversity Policy
The Company fosters an inclusive working environment
that promotes employment equity and workforce
diversity at all levels, including within the executive
team and Board. The Diversity Guidelines are available
on the investor relations website.
A gender breakdown of Directors and officers of the
Company and its subsidiaries as at 31 March 2019 and
31 March 2020 are detailed below. For the purposes of
accurate disclosure Glenn Milnes (2019: Glenn Milnes
and Leon Toorenburg) is shown both as a Director
and an officer.
6. Mark Ratcliffe (Independent, Non-executive Director),
7. Glenn Milnes (Not Independent, Chief Executive Officer and
Managing Director)
Leon Toorenburg ceased being a director of ikeGPS
Limited on 7 May 2020 and was not acting as an officer
of the company through FY20.
Mark Ratcliffe was appointed as a Director on 1
January 2020.
Profiles of the Directors can be found on page 25.
The nominations committee identifies and
recommends to the Board, individuals for nomination
as members of the Board and its Committees taking
into account such factors as it deems appropriate
including experience, qualifications, judgement and the
ability to work with other Directors.
Directors
Male
Female
Officers
Male
Female
2020
2019
8
-
2
-
7
-
3
-
28
Corporate Governance Director independence
The Board Charter requires that at least two Directors
be independent and sets out circumstances in which a
Director will not be regarded as independent.
The Board assesses Director independence against the
criteria in the Charter. The Board consider the following
Directors to be independent at present, Rick Christie,
Bruce Harker, Bill Morrow, Mark Ratcliffe and Fred Lax.
Director training
Each Director undertakes appropriate education to
remain current in how to best perform their duties as
Directors. Individual Directors maintain membership
of relevant bodies such as the Institute of Directors
and receive information independently and from
management in relation to specific issues relevant to
the Group, the markets in which it operates, or to NZX
and ASX listed companies generally.
Board performance
Annually the Board reviews how it is performing. The
review process comprises a group self-evaluation
relating to Board and committee composition and
performance. The Board has found this effective and
believe it has helped to refine the Group’s strategy
setting processes, and the information provided in
Board papers. The Board is satisfied that the Board
and its committees are operating well and that the
performance process used are both effective and
suited to the company.
Committees
The Board committees review and consider in detail
the policies and strategies developed by management.
They examine proposals and make recommendations
to the Board. They don’t take action or make
decisions on behalf of the Board unless specifically
mandated to do so.
During FY20 year the Group’s standing Board
committees were the
+ Audit & risk management committee
+ Remuneration committee
29
Corporate Governance The CEO and CFO certify to the Board that the integrity
of the financial statements is founded on a sound
system of risk management and internal compliance
and control.
Non-financial reporting
The Group has not adopted a formal environmental,
social and governance (ESG) reporting framework
at this time. The Group’s exposure to non-financial
risks, including economic, environmental and social
sustainability risks, is incorporated into the key risk
assessments that we refer to under risk management
(on page 31). The Group is predominantly an office-
based software company with minimal impact on non-
financial risks.
Disclosure to the market
The Group has a written disclosure policy – the
Continuous Disclosure Policy, found on the investor
relations site. It sets out requirements for full and
timely disclosure to the market of material issues, so
all stakeholders have equal access to information. The
Board reviews and approves material announcements.
The Board specifically consider with management
at each Board meeting whether there are any issues
which might require disclosure to the market under the
NZX and ASX continuous disclosure requirements.
Information for investors
The Group’s’s investor relations website includes the
Company’s presentations, reports, announcements,
and media releases, as well as the Charters and
guidelines referred to in this section. The Annual
Report is available in electronic and hard copy format.
The Group’s annual meeting will be held Tuesday, 29
September. The external auditors, PWC, will respond to
any questions submitted prior to the meeting.
Audit & Risk Management committee:
Fred Lax (chair), Bruce Harker.
The committee members are independent Directors.
In accordance with the NZX Code the Audit & Risk
Management Committee is chaired by an independent
Director, Fred Lax, who is not the Chair of the Board.
The committee’s Charter is set out on the investor
relations website. The committee met four times
in the year to 31 March 2020. Management attend
meetings only at the invitation of the committee, and at
least annually the committee meets with the external
auditors with management excluded.
Remuneration committee:
Rick Christie (chair), Bruce Harker.
The committee members are independent Directors.
The committee met on six occasions in the year to 31
March 2020. This committee has oversight of matters
of recruitment, retention and remuneration.
Other committee matters
The Board will occasionally appoint a committee of
Directors to consider or approve a specific proposal
or action, if the timing of meetings or availability of
Directors means the matter cannot be considered by
the full Board. Their deliberations and decisions are
reported back to the Board not later than the next
meeting following.
Takeover protocol
The Board has decided not to establish a takeover
committee or protocols documenting the procedure to
be followed in the event it receives a takeover offer. The
Board has determined that due to the current size and
make-up of the Board, it is sufficiently independent and
can manage the takeover process and any additional
issues, effectively as a whole Board.
Reporting and disclosure
Financial reporting
The Board is responsible for ensuring the integrity of
the Company’s reporting to shareholders, including
for financial statements that comply with generally
accepted accounting practice. The Board’s Audit & Risk
Management committee oversees the quality, reliability
and accuracy of the financial statements and related
documents (the Audit & Risk Management committee’s
role is described fully in its Charter). In doing so the
committee makes enquiries of management and
external auditors (including requiring management
representations) so that the committee can be satisfied
as to the validity and accuracy of all aspects of the
Group’s financial reporting.
30
Director's Report by the Board, and an LTI component, in employee
stock options.
Glenn’s fixed salary for the year to 31 March 2020 was
US$350,000. Performance for the purposes of the STI
component has not yet been assessed.
Glenn had 1,000,000 employee stock options on 31
March 2020. He exercised 200,000 of those options on
13 May 2020 which resulted in 111,141 shares being
issued. The remaining 800,000 employee stock options
have vesting dates from 2021 to 2025. Vesting at each
date is dependent on him remaining an employee at the
applicable vesting date.
Risk management
The Group has an enterprise risk management
framework in place to identify, quantify, and prioritise
risks. The framework categorises enterprise risks and
sets mitigating actions to manage these risks. The
Group doesn’t have an internal audit function.
Remuneration
Remuneration of Directors
The total remuneration pool for Directors is set at
$420,000 per annum.
For the financial year the annual fees paid to
Directors were:
+ Chairman $90,000 (including all committee responsibilities)
+ All other Directors $245,500
The last increase in Directors’ fees was made with
effect from 01 May 2019. The Directors’ fees for FY20
are set out on page 35.
Remuneration of employees
The Group aims to have remuneration framework
and policies to attract and retain talented and
motivated people.
The Company wants to:
+ Be recognized as a great place to work, and attract, retain and
motivate high-performing individuals.
+ Align employee incentives with the achievement of good
business performance and shareholder return.
+ Recognize and reward individual success, while encouraging
teamwork and a high-performance culture.
+ Be competitive in the labour market.
+ Be fair, consistent and easy to understand.
Employee remuneration principles
The Group uses market data to determine competitive
salary and total remuneration levels for all staff. The
Group makes allowance for individual performance,
scarcity of skills, internal relativities and specific
business needs. The Group is operating in a growth
industry and has a skilled and mobile workforce.
All employees have fixed remuneration. Selected
employees have the potential to earn a Short Term
Incentive (STI) and Long Term incentive (LTI).
CEO remuneration
Glenn Milnes’s employment agreement for his role as
CEO commenced on July 2010. His agreement reflects
appropriate standard conditions for a chief executive of
a listed company.
Glenn’s remuneration is a combination of fixed salary
and incentive arrangements. The incentives are an STI
component set at up to 50% of base salary, linked to
specific financial and non-financial targets set annually
31
Director's Report Shareholder rights and relations
The Group’s financial reports and corporate governance
documentation is available on the group’s website
https://ike4.ikegps.com/company/.
The Group keeps shareholders informed through
periodic reporting to NZX and ASX, and through its
continuous disclosure. The Group provides briefings
and presentations to media and analysts (which are
made immediately available on the investor relations
website) and communicate with shareholders through
annual and half-year reports and annual shareholder
meeting. The Group encourages shareholders to refer
to the investor relations website, and to receive annual
and half-year reports electronically but hard copies
of the reports can readily be obtained from the share
registrar, Link Market Services Limited. The Group take
care to write all shareholder communications in a clear
and straightforward way and to limit the use of jargon.
Due to the current Covid-19 situation, the Group has
decided to hold its Annual Shareholders Meeting
virtually. A notice of the meeting and proxy form will be
circulated to shareholders closer to the time.
Health and Safety Risk
The Group values the health, safety and wellness of our
people and we believe that everyone should be able to
work in an environment where risks are managed and
controlled. We have a health, safety and wellness plan
that identifies our risks and the current procedures to
mitigate these from occurring.
The Group is a relatively low-risk office-based business.
However, we do have employees performing training
and in some instances field work for customers. The
Board is conscious of these risks to employees and
have viewed the actions currently in place to mitigate
these. The frequency of incidents has been very low, so
the Board has not required LTIFR reporting to date.
Auditors
The Group has an external Auditor Policy that requires
the external auditor to be independent and to be seen
as independent. The Board is satisfied that there is no
relationship between the auditor and the Group or any
related person at this time, that could compromise
the auditor’s independence. The Board also obtained
confirmation of independence formally from the
auditor. To ensure full and frank dialogue amongst the
Audit & Risk Management committee and the auditors,
the auditor’s senior representatives meet separately
with the Audit & Risk Management committee (without
management present) at least once a year.
Non-audit work
The Audit Independence Policy sets out restrictions on
non-audit work that can be performed by the auditor.
32
Director's Report Disclosures
Audit Fees
The amounts payable to PwC as auditor of the Group
are as set out in Note 6 to the financial statements.
Subsidiary company Directors
The following people held office as Directors
of subsidiary companies of the Company on
31 March 2020:
1.
ikeGPS Inc: Glenn Milnes, Leon Toorenburg and Alex Knowles.
2.
ikeGPS Limited: Leon Toorenburg, Rick Christie and Bruce
Harker (Leon Toorenburg ceased to be a director from 7 May
2020)
Dividends
As part of the Group's growth plans, dividends are not
currently paid and the Board did not declare a dividend
in respect of the period ending 31 March 2020 nor does
it expect to declare any dividends during the period
ending 31 March 2021.
Net Tangible Assets
The Net Tangible Assets per security on 31 March 2020
was $0.04 (31 March 2019: $0.06).
NZX Waivers
The Group has relied on the class waiver granted by
NZX dated 3 April 2020 providing an extension of
periodic reporting deadlines in Listing Rules 3.5.1
and 3.6.1, for both its Results Announcement and
Annual Report.
Key Management
The Company’s officers as at 31 March 2020, and their
respective roles, were as follows:
Glenn Milnes Chief Executive Officer
Chris Birkett
Chief Financial Officer and Chief
Operating Officer
Annual Meeting
The Company will hold a fully virtual Annual Meeting
of shareholders on 29 September 2020. A notice
of Meeting and Proxy Form will be circulated to
shareholders closer to the time.
33
Disclosures
Entries recorded in interests register
The following are particulars of entries made in the Company’s interests register pursuant to section 140 of the
Companies Act 1993 for the period 1 April 2019 to 31 March 2020 (including in respect of those Directors who are
Directors of the Company’s subsidiaries).
Interest
Declaration
No conflicting interests
No conflicting interests
No conflicting interests
No conflicting interests
No conflicting interests
Director
Director
Chairman
Chairman
Trustee
Chairman
Director
Director
Board
Member
Board
Member
Board
Member
Director
Director
Board
Member
Director
Director
Director
Trustee and
Beneficiary
Trustee and
Beneficiary
Director
Chairman
Director
Trustee
Chairman
Director
Director
Rick Christie - Chairman
Solnet Group (Private)
NZX:SPN Southport NZ Limited (Resigned in November, 2019)
National e-Science Infrastructure (NeSI)
Service IQ limited (Resigned in June, 2019)
Victoria University Foundation
Dr Bruce Harker - Non Executive Director
Tilt Renewables Ltd
Alex Knowles - Non Executive Director
Alphian Investments Ltd
A Way To Move Inc
Trinium Technologies LLC / QED LLC
Xenon FS LLC
AWA Shipping / Intelligent SCM LLC
Epe Frame Metal Spa
Framemax Systems Inc
Infrastructure Solutions Group LLC
Climate Coatings Ltd
Bill Morrow - Non Executive Director
2019 Daisie Limited
Mark Ratcliffe - Non Executive Director
Mark Ratcliffe Consulting Limited
Te Awanga Investments Limited
Matapouri Family Trust
Ratcliffe Barker Family Trust
Auckland Transport
First Gas and related companies; Gas Services Limited, Gas Services NZ, Midco Limited, Gas Services SPV1
Limited and Rock Gas Limited
2Degrees Limited
Kaibosh Charitable Trust
The Guildford Timber Company Limited
WilliamsWarn NZ Limited and WilliamsWarn Holdings Limited
34
Disclosures Directors remuneration and other benefits
Directors’ fees are currently set at a maximum of $420,000 for the non-executive Directors. The actual amount of
fees paid in the year to 31 March 2020 was $335,500 (2019: $279,000).
Directors fees and other remuneration and benefits (including share option expense) from the Company
recognized in profit or loss during the accounting period ended 31 March 2020 are as follows:
Director
Total 2020 Remuneration and other Benefits
Declaration
Richard Gordon Maxwell Christie
Bruce Harker
Alex Knowles
Frederick Lax
Bill Morrow
Mark Ratcliffe
Glenn Milnes*
Leon Toorenburg*
Total
92,791 Director fees & share option expense
70,791 Director fees & share option expense
52,791 Director fees & share option expense
67,791 Director fees & share option expense
87,505 Director fees & share option expense
12,500 Director fees
793,896 Salary, share option expense & entitlements
384,595 Salary, share option expense & entitlements
$ 1,562,659
*Glenn Milnes and Leon Toorenburg received salary and entitlements in US$ as employees of ikeGPS Inc. Remuneration shown above, has been converted to NZ$
at the average rate for the month each transaction took place. Neither received any remuneration in their capacity as a Director of any Group company. Entitlements
include the share option expense.
Each Director is separately entitled to be reimbursed for reasonable travelling, accommodation and other
expenses incurred in performing their role as a Director.
No Director of either of the Company’s subsidiaries receives any remuneration in that capacity.
Options granted to Directors are stated below in Directors’ relevant interests.
Statement of Directors’ relevant interests
Directors (including Directors of subsidiary companies) held the following relevant interests in equity securities of
the Company as at 31 March 2020.
Quoted Shares
With beneficial interest
As trustee or associated person
of registered holder
Total number of ordinary shares
31 March 2020
Unlisted options to
acquire
ordinary share
Richard Christie
Bruce Harker
Bill Morrow
Alex Knowles
Glenn Milnes
Frederick Lax
Mark Ratcliffe
Leon Toorenburg
Total
143,696
-
150,000
-
657,280
302,932
-
-
1,253,908
-
450,565
-
8,589,822
120,300
-
-
1,204,829
10,365,516
143,696
450,565
150,000
8,589,822
777,580
302,932
-
1,204,829
11,619,424
299,999
300,000
300,000
300,000
1,000,000
300,000
-
250,000
2,749,999
35
Disclosures Director share dealing
Date
Director
Registered holder /
Associated entity
Class of financial
product
Acquired /
(Disposed of)
Consideration $
Notes
5-Jun-19
Glenn Milnes
Tammy Brooke
Ordinary shares
7,000
21-Jun-19
Glenn Milnes
Tammy Brooke
Ordinary shares
17,400
3,710
9,222
Alex Knowles
BK and MK Trust
Ordinary shares
399,705
214,255
On market purchase of
shares
On market purchase of
shares
On market purchase of
shares
Fred Lax
Fred Lax
Ordinary shares
66,666
40,000
Placement participant
Glenn Milnes
Glenn Milnes
Ordinary shares
116,666
70,000
Placement participant
Bill Morrow
Bill Morrow
Ordinary shares
150,000
90,000
Placement participant
Alex Knowles
BK and MK Trust
Ordinary shares
1,000,000
600,000
Placement participant
Bruce Harker
BJ & JS Harker Trust
Ordinary shares
41,670
25,000
Placement participant
24 June 19 to 9
July 2019
2-Oct-19
2-Oct-19
2-Oct-19
2-Oct-19
2-Oct-19
18-Dec-19
Glenn Milnes
Glenn Milnes
Ordinary shares
(350,000)
290,500
Off-market sale of
shares
16-Mar-20
Leon
Toorenburg
Leon and Fanny
Toorenburg
Spread of security holders
Security holders as at 19 August 2020
Ordinary shares
25,290
-
Exercised share options
Size of shareholding
Number of holders
% of holders
Total shares held
% of shares
1-1,000
1,001-5,000
5,001-10,000
10,001-50,000
50,001-100,000
Greater than 100,000
Total
75
232
144
300
69
97
917
8.18%
25.30%
15.70%
32.72%
7.52%
10.58%
100%
47,114
663,967
1,080,916
6,672,633
4,972,044
117,835,503
131,272,177
0.04%
0.51%
0.82%
5.08%
3.79%
89.76%
100%
36
Disclosures Twenty largest registered shareholders
As at 19 August 2020
Rank
Shareholder
Holding
% total shares on issue
Nicola Jane Wilson & David Jonathan Wilson
Forsyth Barr Custodians Limited
Tanza Elizabeth Knowles & Veronica Pauline Lawrie
Kevin Glen Douglas & Michelle Mckenney Douglas
Forsyth Barr Custodians Limited
FNZ Custodians Limited
Kevin Douglas & Michelle Douglas
James Douglas Jr & Jean Ann Douglas
New Zealand Permanent Trustees Limited
Leveraged Equities Finance Limited
Accident Compensation Corporation
HSBC Custody Nominees (Australia) Limited
Hector Rex Nicholls & Kerry Leigh Prendergast
J P Morgan Nominees Australia Pty Limited
Dongwen Xiong
National Nominees Limited
Nzvif Investments Limited
Cs Third Nominees Pty Limited
HSBC Nominees (New Zealand) Limited
Leon & Fanny Toorenburg
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Total
24,159,975
12,804,673
9,816,939
6,383,460
4,753,988
3,362,660
3,191,731
3,191,731
3,086,561
3,057,547
2,896,632
2,727,084
2,605,663
2,429,448
1,830,014
1,699,048
1,685,029
1,552,550
1,247,241
1,204,829
18.4%
9.8%
7.5%
4.9%
3.6%
2.6%
2.4%
2.4%
2.4%
2.3%
2.2%
2.1%
2.0%
1.9%
1.4%
1.3%
1.3%
1.2%
1.0%
0.9%
93,686,803
71.3%
Substantial product holders
According to notices given under the Securities Markets Act 1988 and the Financial Markets Conduct Act 2013 as
at 31 March 2020, the following were substantial product holders in respect of the 102,194,048 ordinary shares of
the Company on issue as at 31 March 2020 (being the Company’s only class of quoted voting securities):
Name
Shareholding
%
Nature of relevant interest
David Jonathan Wilson and Nicola Jane Wilson
24,159,975
18.40%
Tanza Elizabeth Knowles & Veronica Pauline Lawrie
9,816,939
7.48%
Registered holder and beneficial owner of financial
products
Registered holder and beneficial owner of financial
products
Scobie Ward
12,738,673
9.70%
Registered holder and beneficial owner of financial
products
Douglas Irrevocable Descendants Trust, Douglas Family
Trust & K&M Douglas Trust
12,766,922
9.73%
Registered holder and beneficial owner of financial
products
37
Disclosures Employee Remuneration
The following table shows the number of current or former
employees (excluding employees holding office as Directors
of the parent or a subsidiary) who received remuneration
and other benefits in excess of $100,000 from the
subsidiary companies of the Group during the year ended
31 March 2020:
Band
$100,000 to $109,999
$110,000 to $119,999
$120,000 to $129,999
$130,000 to $139,999
$140,000 to $149,999
$150,000 to $159,999
$160,000 to $169,999
$170,000 to $179,999
$180,000 to $189,999
$190,000 to $199,999
$200,000 to $209,999
$210,000 to $219,999
$220,000 to $229,999
$230,000 to $239,999
$240,000 to $249,999
$250,000 to $259,999
$260,000 to $269,999
$270,000 to $279,999
$280,000 to $289,999
$290,000 to $299,999
$300,000 to $309,999
$310,000 to $319,999
$320,000 to $329,999
Total
Number of
employees
Band
Number of
employees
4
3
1
2
1
1
2
-
-
-
1
-
1
-
-
1
-
-
-
-
1
-
-
$330,000 to $339,999
$340,000 to $349,999
$350,000 to $ 359,999
$360,000 to $ 369,999
$370,000 to $ 379,999
$380,000 to $ 389,999
$390,000 to $ 399,999
$400,000 to $ 409,999
$410,000 to $ 419,999
$420,000 to $429,999
$430,000 to $439,999
$440,000 to $449,999
$450,000 to $459,999
$460,000 to $469,999
$470,000 to $479,999
$480,000 to $489,999
$490,000 to $499,999
$500,000 to $509,999
$510,000 to $519,999
$520,000 to $529,999
$530,000 to $539,999
$540,000 to $549,999
$550,000 to $559,999
-
-
1
-
1
-
1
-
1
-
-
-
-
-
-
-
-
-
-
-
-
-
1
23
Donations
No member of the Group made any significant donations
during the financial year. The Group undertakes regular
promotional sponsorship activity through a variety
of channels.
38
Disclosures Consolidated
Financial Statements
Year End // 31 March 2020
Independent Auditor's Report
Consolidated Statement of Profit or Loss and other Comprehensive Income
Consolidated Statement of Changes in Equity
Consolidated Balance Sheet
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
40
47
48
49
50
51
ikeGPS Group Limited
39
Independent auditor’s report
To the Shareholders of ikeGPS Group Limited
We have audited the consolidated financial statements which comprise:
● the consolidated balance sheet as at 31 March 2020;
● the consolidated statement of profit or loss and other comprehensive income for the year then
ended;
● the consolidated statement of changes in equity for the year then ended;
● the consolidated statement of cash flows for the year then ended; and
● the notes to the consolidated financial statements, which include significant accounting
policies.
Our opinion
In our opinion, the accompanying consolidated financial statements of ikeGPS Group Limited (the
Company), including its subsidiaries (the Group), present fairly, in all material respects, the financial
position of the Group as at 31 March 2020, its financial performance and its cash flows for the year
then ended in accordance with New Zealand Equivalents to International Financial Reporting
Standards (NZ IFRS) and International Financial Reporting Standards (IFRS).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (ISAs
(NZ)) and International Standards on Auditing (ISAs). Our responsibilities under those standards are
further described in the Auditor’s responsibilities for the audit of the consolidated financial
statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
We are independent of the Group in accordance with Professional and Ethical Standard 1 (Revised)
Code of Ethics for Assurance Practitioners (PES 1) issued by the New Zealand Auditing and Assurance
Standards Board and the International Ethics Standards Board for Accountants’ Code of Ethics for
Professional Accountants (IESBA Code), and we have fulfilled our other ethical responsibilities in
accordance with these requirements.
Our firm carries out other services for the Group in the areas of assurance services relating to the
Company's research and development Callaghan Grant. The provision of these other services has not
impaired our independence as auditor of the Group.
Material uncertainty related to going concern
We draw attention to note 2 in the financial statements, which indicates that the Group incurred an
operating cash outflow of $1.1 million for the year ended 31 March 2020, and an investing outflow of
$4.0 million. The Group also incurred a net loss of $5.2 million for the year. The cash balance at 31
March 2020 was $4.3 million. The Directors disclose in note 2 that due to the high growth nature of
the business, historic accuracy of forecasting has been challenging and this is exacerbated in the
current economic environment caused by COVID-19. If the Group fails to achieve its FY21 business
PricewaterhouseCoopers, PwC Centre, 10 Waterloo Quay, Wellington 6011
T: +64 4 462 7000, F: +64 4 462 7001, pwc.co.nz
40
plan (particularly forecast sales volume growth), manage costs or obtain alternative sources of
financing it may not be able to meet its obligations as they fall due. As stated in note 2, these
conditions, along with other matters as set forth in note 2, indicate that a material uncertainty exists
that may cast significant doubt on the Group’s ability to continue as a going concern. Our opinion is
not modified in respect of this matter.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the consolidated financial statements of the current year. These matters were addressed in
the context of our audit of the consolidated financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter
Impairment testing of assets
As disclosed in note 2, Basis of preparation, the
Group has undertaken an assessment of the
carrying value of its assets. The Utilities and
Communication segment’s continued operating
losses and the low relative revenue from the Spike
Business unit are indicators of impairment.
To determine whether the carrying value of the
assets is reasonable, management identified two
cash generating units (CGUs):
●
●
Ike core platform, development assets,
property, plant and equipment, leased assets
and working capital (CGU1).
Spike development assets and Software
Development Kit (CGU2).
Management performed an impairment
assessment of CGU1 and CGU2 on a value in use
(VIU) basis. These assessments were based on
discounted cash flow models using the Board-
approved budgets for FY21, then extrapolating
cash flows for subsequent years.
Key estimates and assumptions for CGU1 include:
●
●
●
●
Average forecast sales volume growth of 22%;
A terminal value assessed at one times the
FY25 net operating profit;
A pre-tax discount rate of 15.5%; and
A further useful life of the assets of six years.
How our audit addressed the key audit
matter
We obtained an understanding and evaluated the Group’s
processes and controls relating to the assessment of
impairment indicators of assets, the preparation and
approval process of forecasts, and the execution of the
impairment assessment. This included assessing
management’s response to COVID-19, and the phasing of
cash flow forecasts as a result of the substantial slow-
down in economic activity from March 2020.
We performed procedures to evaluate and challenge the
Group’s determination of CGUs. This included reviewing
internal management reporting to assess the level at
which the Group monitors performance, comparing
CGU’s to our knowledge of the Group’s operations and
reporting systems, and reconciling assets allocated to
CGUs to those totals within the general ledger.
We obtained management’s assessment of impairment
indicators and assessed whether the indicators identified
were consistent with our understanding of the operations
and environment of the business.
We obtained management’s impairment assessments and
tested the mathematical accuracy of the impairment
models. We used our internal valuation experts to
determine our own independent point estimate of the
recoverable amounts of CGU1 and CGU2. We used a
discounted cash flow model under a value in use
approach for CGU1 and a fair value less costs of disposal
(FVLCD) approach for CGU2. Our calculations and
procedures included the following:
● Determining forecast sales volumes by reference to
the Board-approved budget for the year ending 31
March 2021 and the forecast sales growth adopted by
management in the subsequent years.
41
Key audit matter
How our audit addressed the key audit
matter
Key estimates and assumptions for CGU2 include:
●
For CGU1, we:
−
Overlaid specific considerations of sales
pipelines, previous growth achievements,
market size and competitive position to
arrive at our independent view of the
revenue profile; and
Identified appropriate cost assumptions
based on the existing cost profile of the
business.
● For CGU2, we:
−
−
−
Overlaid specific considerations of
historic sales volumes and external
research reports containing market
growth forecasts to arrive at our
independent view of the revenue profile;
and
Identified appropriate cost assumptions
from the perspective of a market
participant.
● For both CGUs we used an internal valuation
expert to independently determine a range of
acceptable values for the weighted average
cost of capital (WACC).
Whilst some of the assumed inputs into our
discounted cash flow models were different to
those used by management, we consider:
● Management’s assessment that the
recoverable amount of CGU1 is in excess of its
carrying value to be reasonable; and
● The recoverable amount of CGU2 and
impairment of $1.1 million are consistent with
our own independently calculated point
estimate of the recoverable amount.
We audited the disclosures in the financial
statements to ensure they are compliant with the
requirements of the relevant accounting
standards.
●
●
●
●
Forecast sales volume growth of 2%
subsequent to FY21 in line with expected
market growth;
A terminal value assessed at one times the
FY25 net operating profit;
A pre-tax discount rate of 14.1%; and
A further useful life of the assets of six years.
The impairment assessments were a key audit
matter due to the materiality of the assets, the risk
of impairment, and the significant level of
judgement applied in estimating future cash flows
and other key assumptions in determining the
recoverable amount of a CGU.
Based on management’s assessments, an
impairment of $1.1 million was recognised in
respect to CGU2 and attributed to
development assets. Refer to notes 2 and 15
in the financial statements for disclosures on
the impairment of the development assets.
42
Key audit matter
Acquisition of the PowerLine Technology
business
As disclosed in note 2, Basis of preparation,
the Group acquired the business of
PowerLine Technology, Inc. (PLT) in October
2019.
The Group paid $3.75 million for PLT as
follows:
● $2.59 million paid in cash at acquisition
date; and
● $1.15 million of deferred consideration to
be paid in shares issued in three equal
tranches through to November 2021.
A further amount of US$0.9 million of
contingent consideration will be paid in cash
(US$0.63 million) and shares (US$0.27
million) over three years subject to the
founder of PLT remaining employed by the
Group.
In accounting for the acquisition of PLT,
management has assessed the deferred
consideration to be a financial liability on
acquisition date, and the contingent
consideration to be remuneration for services
to be rendered over the earn out period.
Management has also assessed the fair value
of the assets acquired at $3.75 million. These
assets primarily comprise software, customer
contracts and relationships, and training
materials.
The acquisition of PLT was a key audit
matter due to the significant judgement
involved in identifying the appropriate
accounting treatment of the acquisition and
in determining the fair values of the assets
acquired, liabilities assumed and contingent
and deferred consideration.
How our audit addressed the key audit
matter
We obtained an understanding and evaluated the
Group’s processes and controls relating to the
accounting for business combinations and the
valuation of assets acquired and liabilities
assumed. We completed the following audit
procedures to test the acquisition:
● We used our internal technical accounting
experts to evaluate and challenge the Group’s
determination of consideration and
remuneration, specifically the judgement
determining what elements of the transaction
were deferred and contingent consideration
and how they should be accounted for.
● We obtained management’s assessment of the
assets acquired and challenged whether that
assessment was complete.
−
● We obtained management’s models used to
calculate the fair value of the assets acquired
and liabilities assumed and tested the
mathematical accuracy of those models.
● We used our internal valuation experts to:
Challenge and assess the
appropriateness of the valuation
methods used to determine the fair
values of each of the assets acquired;
Validate the assumptions and source
data underlying the models, in
particular the forecast sales profile; and
Independently determine a range of
acceptable values for the discount rate.
−
−
We audited the disclosures in the financial
statements to ensure they are compliant with the
requirements of the relevant accounting
standards.
43
Our audit approach
Overview
An audit is designed to obtain reasonable assurance whether the financial
statements are free from material misstatement.
Overall Group materiality: $98,400, which represents 1% of total revenue.
We chose total revenue as the benchmark because, in our view, it is the
benchmark against which the performance of the Group is most
commonly measured by users, and is a generally accepted benchmark.
We have determined that there are two key audit matters:
● Impairment testing of assets
● Acquisition of the PowerLine Technology business
Materiality
The scope of our audit was influenced by our application of materiality.
Based on our professional judgement, we determined certain quantitative thresholds for materiality,
including the overall Group materiality for the consolidated financial statements as a whole as set out
above. These, together with qualitative considerations, helped us to determine the scope of our audit,
the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both
individually and in aggregate on the consolidated financial statements as a whole.
Audit scope
We designed our audit by assessing the risks of material misstatement in the consolidated financial
statements and our application of materiality. As in all of our audits, we also addressed the risk of
management override of internal controls including among other matters, consideration of whether
there was evidence of bias that represented a risk of material misstatement due to fraud.
We tailored the scope of our audit in order to perform sufficient work to enable us to provide an
opinion on the consolidated financial statements as a whole, taking into account the structure of the
Group, the accounting processes and controls, and the industry in which the Group operates.
The financial statements are a consolidation of the Company and two subsidiaries, one in New Zealand
and one in the United States of America. The Company and both subsidiaries share one centralised
group finance function.
We developed the scope of our audit procedures on a Group financial statement line item basis and
completed audit work on those Group balances at the materiality level set for the Group. All audit
procedures were conducted by the Group audit team.
44
Information other than the consolidated financial statements and auditor’s report
The Directors are responsible for the annual report. Our opinion on the consolidated financial
statements does not cover the other information included in the annual report and we do not express
any form of assurance conclusion on the other information. At the time of our audit, there was no
other information available to us.
In connection with our audit of the consolidated financial statements, our responsibility is to read the
other information and, in doing so, consider whether the other information is materially inconsistent
with the consolidated financial statements or our knowledge obtained in the audit, or otherwise
appears to be materially misstated. If, based on the work we have performed on the other information
that we obtained prior to the date of this auditor’s report, we conclude that there is a material
misstatement of this other information, we are required to report that fact.
Responsibilities of the Directors for the consolidated financial statements
The Directors are responsible, on behalf of the Company, for the preparation and fair presentation of
the consolidated financial statements in accordance with NZ IFRS and IFRS, and for such internal
control as the Directors determine is necessary to enable the preparation of consolidated financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the Directors are responsible for assessing the
Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the Directors either intend to liquidate
the Group or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial
statements, as a whole, are free from material misstatement, whether due to fraud or error, and to
issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with ISAs (NZ) and ISAs will always
detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these consolidated financial statements.
A further description of our responsibilities for the audit of the consolidated financial statements is
located at the External Reporting Board’s website at:
https://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-responsibilities/audit-
report-1/
This description forms part of our auditor’s report.
45
Who we report to
This report is made solely to the Company’s Shareholders, as a body. Our audit work has been
undertaken so that we might state those matters which we are required to state to them in an auditor’s
report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company’s Shareholders, as a body, for our
audit work, for this report or for the opinions we have formed.
The engagement partner on the audit resulting in this independent auditor’s report is Christopher
Ussher.
For and on behalf of:
Chartered Accountants
16 July 2020
Wellington
46
Financial Statements
Consolidated statement of profit or loss and other
comprehensive income
Year ended 31 March Group
Continuing operations
Operating revenue
Cost of sales
Gross profit
Other income
Operations cost
Sales and marketing expenses
Research and engineering expenses
Corporate costs
Foreign exchange (losses)/gains
Expenses
Operating loss
Net finance (expense)/income
Net loss before income tax
Income tax (expense)/credit
Loss attributable to owners of ikeGPS Group
Other comprehensive loss
Exchange differences on translation of foreign operations
Comprehensive loss
Note
6
6
6
6
6
6
12
2020
$'000's
9,838
(2,878)
6,960
1
(541)
(4,697)
(3,383)
(4,011)
5
(12,627)
(5,666)
(22)
(5,688)
(17)
(5,705)
552
(5,153)
2019
$'000's
7,996
(2,646)
5,350
102
(643)
(3,226)
(3,210)
(3,443)
(39)
(10,561)
(5,109)
17
(5,092)
4
(5,088)
168
(4,920)
Basic and diluted loss per share
22
$(0.06)
$(0.06)
The accompanying notes form part of, and should be read in conjunction with, these financial statements.
47
Financial Statements
Consolidated statement of changes in equity
Opening balance at 1 April 2018
Changes in accounting policy
Restated balance at 1 April 2018
Loss for the year
Currency translation differences
Total comprehensive income/(loss)
Issue of ordinary shares
Recognition of vesting of share-based
options
Share based payment reserve movement
Total transactions with owners
Balance at 31 March 2019
Opening balance at 1 April 2019
Change in accounting policy
Restated balance at 1 April 2019
Loss for the year
Currency translation differences
Total comprehensive income/(loss)
Issue of ordinary shares
Recognition of vesting of share-based
options
Issue of shares from exercising share
options
Share based payment reserve
Total transactions with owners
Balance at 31 March 2020
Share capital
Accumulated
losses
Share based
payment reserve
Foreign currency
translation reserve
$'000's
49,263
-
49,263
-
-
-
5,869
-
-
5,869
55,132
$'000's
(41,088)
274
(40,814)
(5,088)
-
(5,088)
-
-
56
56
(45,846)
$'000's
60
-
60
-
-
-
-
188
(56)
132
192
$'000's
(283)
-
(283)
-
168
168
-
-
-
-
(115)
Share Capital
Accumulated
losses
Share based
payment reserve
Foreign currency
translation reserve
$'000's
55,132
-
55,132
-
-
5,940
-
37
389
6,366
61,498
$'000's
(45,846)
(45)
(45,891)
(5,705)
(5,705)
-
-
-
-
-
-
(51,596)
$'000's
192
-
192
-
-
-
-
259
(27)
121
353
545
$'000's
(115)
-
(115)
-
552
552
-
-
-
-
-
437
Total
$'000's
7,952
274
8,226
(5,088)
168
(4,920)
5,869
188
-
6,057
9,363
Total
$'000's
9,363
(45)
9,318
(5,705)
552
(5,153)
5,940
259
10
510
6,719
10,884
The accompanying notes form part of, and should be read in conjunction with, these financial statements.
48
Financial Statements
Consolidated balance sheet
Year ended 31 March Group
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Prepayments
Inventory
Total current assets
Non-current assets
Property, plant and equipment
Intangible assets
Inventory
Lease assets
Deferred tax asset
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Employee entitlements
Other liabilities
Lease liabilities
Deferred income
Total current liabilities
Non-current liabilities
Lease liabilities
Other liabilities
Deferred income
Total non-current liabilities
Total liabilities
Total net assets
EQUITY
Share capital
Share based payment reserve
Accumulated losses
Foreign currency translation reserve
Total equity
Director
NZ (New Zealand Time)
Date: 16 July 2020
Director
NZ (New Zealand Time)
Date: 16 July 2020
The accompanying notes form part of, and should be read in conjunction with, these financial statements.
7
9
8
14
15
8
3
12
10
20
3
6
3
20
6
13
2020
$'000's
4,327
1,576
681
876
7,460
1,188
6,501
534
705
-
8,928
16,388
931
231
574
327
2,392
4,455
460
534
55
1,049
5,504
10,884
61,498
545
2019
$'000's
3,475
1,370
294
1,691
6,830
944
3,604
-
-
17
4,565
11,395
505
226
-
-
1,246
1,977
-
-
55
55
2,032
9,363
55,132
192
(51,596)
(45,846)
437
10,884
(115)
9,363
49
Financial Statements
Consolidated statement of cash flows
Cash flows from operating activities
Cash receipts from customers
Cash paid to suppliers and employees
Payment of low value and short term leases
Interest paid
Net cash used in operating activities
Cash flows from investing activities
Purchases of property, plant and equipment
Additions to intangible assets
Purchase of assets in business combination
Interest received
Net cash used in investing activities
Cash flows from financing activities
Payment of principal portion of lease liabilities
Exercising of share options
Proceeds from issuance of shares
Net cash from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at 1 April
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents
Year ended 31 March Group
2020
$'000's
10,306
(11,303)
(73)
(34)
2019
$'000's
8,401
(12,422)
-
(14)
21
(1,104)
(4,035)
(781)
(683)
(2,592)
12
(4,044)
(161)
10
5,940
5,789
641
3,475
211
4,327
(477)
(603)
-
31
(1,048)
-
-
5,869
5,869
785
2,586
104
3,475
The accompanying notes form part of, and should be read in conjunction with, these financial statements.
50
Financial Statements
Notes to the
consolidated
financial
statements
1. Reporting entity
ikeGPS Group Limited (the “Company”) is a limited
liability company domiciled and incorporated in
New Zealand, registered under the Companies Act
1993 and listed on the New Zealand Stock Exchange
(“NZX”) and Australian Securities Exchange (“ASX”).
The Company is an FMC reporting entity for the
purposes of the Financial Markets Conduct Act 2013.
The financial statements for the year ended 31 March
2020 comprise the Company and its subsidiaries
(together referred to as the “Group”) which include
ikeGPS Limited and ikeGPS Inc.
The principal activity of the Group is that of design,
sale, and delivery of a solution for the collection,
analysis, and management of distribution assets for
electric utilities and communications companies.
The financial statements were authorised for issue by
the Directors on 16 July 2020.
2. Basis of preparation
The principal accounting policies applied in
the preparation of these consolidated financial
statements are set out below. These policies have
been consistently applied to all the years presented,
unless otherwise stated.
Statement of compliance
The consolidated financial statements have been
prepared in accordance with the requirements
of the Companies Act 1993 and Financial
Reporting Act 2013.
The consolidated financial statements of the Group
have been prepared in accordance with New Zealand
Generally Accepted Accounting Practice (“NZ GAAP”).
The Group is a for-profit entity for the purposes of
complying with NZ GAAP. The consolidated financial
statements comply with New Zealand equivalents
to International Financial Reporting Standards (“NZ
IFRS”), other New Zealand accounting standards and
authoritative notices that are applicable to entities that
apply NZ IFRS. The consolidated financial statements
comply with International Financial Reporting
Standards (IFRS).
Basis of measurement
The financial statements have been prepared
on the historical cost basis with the exception
of certain financial instruments which are
measured in accordance with the specific relevant
accounting policy.
Critical estimates and judgments
The preparation of financial statements requires
management to make judgments, estimates and
assumptions that affect the application of accounting
policies and the reported amounts of assets, liabilities,
income and expenses. Actual results may differ from
these estimates.
Estimates and underlying assumptions are reviewed on
an ongoing basis. Revisions to accounting estimates
are recognised in the period in which the estimate is
revised and in any future periods affected.
Impact of COVID-19
The majority of the Group’s customers operate in North
America. Many of these customers experienced a
substantial slow-down in activity from March through
May 2020 due to the sudden uncertainty created by
COVID-19. Their operations resumed in June, even with
the continued presence of COVID-19 across the U.S.
‘Shelter-at-Home’ orders across the U.S. are exempting
companies deemed “Critical Businesses”, which
includes the Group and its target customers, being
communications companies, electric utilities, and their
associated engineering service providers involved in
constructing and maintaining Critical Infrastructure.
Notwithstanding these mitigating factors and these
U.S. Critical Business provisions, we are planning
for a scenario of lower activity in Q1 and Q2 FY21
and considering the impacts should COVID-19
surge again in specific regions or states where our
customers operate. In the medium term, the Group
remains optimistic that its core infrastructure market
will rebound.
The Group is continuing to closely monitor risks related
to COVID-19, with a focus on the health & safety of staff
and the Group’s resilience across supply chain,
51
2. Basis of preparation (cont.)
customers, and technology. Operationally, the Group
has transitioned its U.S. operation to mostly remote
working, while its New Zealand operation is back to “in-
office” status in the Level-1 environment.
In preparing these financial statements, the Directors of
the Company have considered the impact of COVID-19
on the Group. The slow-down has resulted in a lower
sales volume in the first part of FY21 and average
collection times for receivables has increased. In
addition, the Group is continuing to evaluate whether
any changes to its FY21 business plan are required in
response to changing market conditions. The Group
retains the ability to reduce operating expenditure or
limit further investment in response, should weaker
demand continue. In addition, the Group has received
funds from the New Zealand Wage Subsidy Scheme
in March 2020 and the U.S. Paycheck Protection
Program in May 2020 (refer to note 25 of the financial
statements). As the impact of COVID-19 is likely
to primarily affect the Group’s liquidity, it has been
incorporated into our impairment and going concern
assessments as outlined below.
Going concern
These financial statements have been prepared based
on the Group being a going concern, which assumes
the Group has the ability and intention to continue
operations for a period of at least twelve months from
the date of the approval of the financial statements.
During the Group’s current growth phase, investment
continues into developing and expanding the Group’s
product and service offerings to generate increased
revenue. The Group has continued to reduce, but still
incur, net cash outflows from operating activities
during this phase. During the fiscal year 2020 (FY20),
the Group had cash outflows of $1,104,000 (2019:
$4,035,000) relating to operations, and $4,044,000
(2019: $1,048,000) relating to investing activities. The
cash balance at 31 March 2020 was $4,327,000 (2019:
$3,475,000).
The Board of the Company has approved a base
business plan for FY21 which assumes year-on-
year revenue growth, primarily driven by a full
year contribution of Pole Forman revenue and the
expectation that IKE Analyze revenue will continue to
grow in line with prior periods. The forecast revenue
growth is weighted to Q3 and Q4 FY21, taking
account of the observed slow-down in the market due
to COVID-19.
Accordingly, the liquidity risk creates a material
uncertainty that cash inflows and cash on hand may
not be sufficient for the Group to meet its obligations
as they fall due. This may cast significant doubt on the
ability of the Group to continue as a going concern and,
therefore, may result in the Group’s inability to realise
its assets and settle its liabilities in the normal course
of business. These consolidated financial statements
do not reflect adjustments in the carrying values of
the assets and liabilities, the reported revenues and
expenses, and the balance sheet classifications used,
that would be necessary if the Group were unable to
continue as a going concern.
In response, the FY21 business plan has been extended
by management to the end of July 2021 to project cash
flows for a period of twelve months subsequent to the
approval of these financial statements. The Group is
managing discretionary expenditure and optimising
working capital while continuing investment in realising
the significant sales opportunities for its products and
services over this period. Further cost-cutting measures
are available to the Group if one or more components
of the plan are not realized, in which case planned
investment will be curtailed.
In a high growth business, accuracy of forecasting
is challenging and this is exacerbated in the current
economic environment caused by COVID-19. To
assess the degree of sensitivity, stress testing has
been performed on the FY21 plan, reducing forecast
receipts from customers by 15-20% and reducing
additional planned headcount and discretionary
costs. The outcome of this analysis shows that the
Group remains a going concern, albeit with reduced
available cash funds.
In reaching the conclusion that the Group is a going
concern, management have also considered alternative
sources of funding, including:
+ Undrawn overdraft and receivables factoring facilities;
+ The forgiveness of the Paycheck Protection Program (PPP)
loan of $825,000 drawn down in May 2020 (refer to note 25 for
details); and
+ The ability to raise additional capital.
In FY20 the Group completed a Private Placement
and Retail Offer raising $6.5m to primarily fund the
acquisition of the assets of PowerLine Technology Inc.
The Group’s dual listing on the NZX and ASX provides
the Group with the potential option to pursue capital
raise opportunities from a wider market in order to,
among other things, expand existing business, and
acquire or establish new businesses. The Directors
believe that additional capital could be raised should
circumstances necessitate.
52
Financial Statements 2. Basis of preparation (cont.)
While acknowledging the material uncertainty that
exists, the Directors believe that projected cash inflows,
combined with cash on hand at 31 March 2020, means
that the Group has sufficient funding to continue
operations for at least the next twelve months from
the date of approval of the financial statements, and
hence consider the use of the going concern basis
appropriate.
Impairment
The carrying amounts of the Group’s assets were
reviewed to determine whether there is any indication
of impairment. The Directors concluded the Utilities
and Communications operating losses as an indicator
of impairment of the assets directly associated with
the Utilities and Communications Business, requiring
an estimate of the Cash Generating Unit’s (CGU1)
recoverable amount. Additionally, the Directors
determined that due to the low revenue from the Spike
Business unit, an indicator of impairment existed
requiring an estimate of the Cash Generating Unit’s
(CGU2) recoverable amount of the assets directly
associated with the Spike Business.
CGU1 was determined to be the IKE & Core platform
intangible assets, total property plant & equipment,
leased assets and working capital totalling $4,069,736.
Future cash flows are forecast based on a five-year
business model for CGU1, which includes Utilities &
Communications average revenue growth rate of 23%
and operating expenses reflect the FY21 business plan
and future software development profile. A pre-tax
discount rate of 15.5% was used to establish the net
present value on a value in use basis.
The forecast financial information is based on both
past experience and future expectations of operating
segment performance and requires judgements
to be made as to revenue growth, operating cost
projections and the market environment. Despite the
short term impact of COVID-19, in the medium term the
Group remains optimistic that its core infrastructure
market will continue due to the significant multi-year
investment programmes our customers have in place.
The value in use assessment is sensitive to changes
in each of these assumptions, actual results may be
substantially different. The terminal value assumed
is 1x year-5 net operating profit, which aligns with the
remaining expected useful life of the assets.
The Directors have determined that no impairment is
required as CGU1 continues to have a useful life and
that the current carrying value of the CGU1 does not
exceed its value in use.
CGU2 is the total intangible assets of Spike
applications, Software Development Kit (SDK) and
working capital totalling $1,968,849. Future cash flows
are forecast based on a five-year business model for
CGU2 and a pre-tax discount rate of 14.1% was used to
establish the net present value on a value in use basis.
Spike revenue reflects the FY21 business plan, with a
revenue growth rate assumed to be 2% from year-2. An
estimate of the cash flows required to market and sell
the Spike products was based on the business plan for
FY21 and forecast sales volume profile. The terminal
value assumed is 1x year-5 net operating profit, which
aligns with the remaining expected useful life of
the assets.
The Directors have determined that an impairment
of $1,100,000 of CGU2 is required as the carrying
value exceeds the recoverable amount determined
by the value in use calculation by that amount.
The impairment has been recorded against the
Spike applications and SDK software and is
included in the Research and Engineering line in the
Consolidated Statement of Profit or Loss and Other
Comprehensive Income. These assets are contained
in the Other Business segment in Note 5 to the
financial statements.
The forecast financial information is based on both
past experience and future expectations of operating
segment performance and requires judgements to be
made as to revenue growth, operating cost projections
and the market environment. It is sensitive to changes
in each of the assumptions outlined above and actual
results may be substantially different. Any change in
the assumptions would likely cause a material change
in the impairment recognised by the Group.
Intangible Assets
Information about significant areas of estimation
uncertainty and critical judgments in applying
accounting policies that have the most significant
effect on the amount recognised in the financial
statements are the measurement and impairment of
intangible assets.
Sensitivity analysis was performed on key
assumptions. A likely material impairment would need
to be considered if the forecast sales volume growth
was lower than forecast by greater than 10%.
Annually the Directors are required to assess the
appropriateness of the asset’s amortisation period.
In the current year, the Directors have assessed the
amortisation period and have concluded that:
53
Financial Statements 2. Basis of preparation (cont.)
+
+
+
+
+
+
the core technology platform underpinning the IKE and Spike devices extends beyond the life of the current hardware product offering and
supports multiple future product releases. Management has reviewed and reassessed the useful life of the core platform to be 6 years.
the period over which the economic benefits to be recognised for the current IKE applications and features available through the current
and future product solutions available to customers. On this basis the useful life of the IKE applications and features was assessed to be 6
years.
the period over which the economic benefits to be recognised for Spike applications and SDK. The future economic benefits will be
realised through the current market share of the signage market and the continued penetration into enterprise customers through
integrating these applications and features into the customers platform. On that basis the useful life has been reassessed to be 6 years.
the period over which the economic benefits from Pole Forman and Sagline Software and associated Trademarks will continue to accrue
to IKE over an assessed useful life of 10 years
the period over which the economic benefits from Pole Forman Training and support seminars will continue accrue to IKE over an
assessed useful life of 10 years
the period over which the economic benefits from Pole Forman contracts and relationships will accrue to IKE over an assessed useful life
of 4 years
The amortisation rates reflecting the change in useful lives of the assets were reset from 1 October 2019. The
table below summarises the impact of this change.
Reduction in amortisation expense due to rate change
ikeGPS Platform
IKE application & feature
Spike applications and features
SDK (software development kit)
Balance at 31 March 2020
FY20
Annualised
impact
$'000's
$'000's
(26)
(70)
(44)
(17)
(157)
(51)
(145)
(94)
(34)
(324)
The pattern of benefits received from the capitalised development may ultimately differ from the Directors' initial
judgment due to risk of obsolescence or other future factors affecting the assets useful life.
Amortisation is calculated to write off the cost of intangible assets less their estimated residual values using the
straight-line method over their estimated useful lives and is recognised in the profit and loss.
In addition to the above, the Group makes judgments about the amount of costs to capitalise as part of the
development asset. The Group’s intangible asset capitalisation policy is used to assist in making these
judgements. The Group capitalises direct labour costs into its development asset. The costs applied are based
on judgment as to the nature of work employees performed, and the amount of time spent on the task. This
is assessed jointly by the engineering and finance functions. Information about significant areas of estimation
uncertainty and critical judgments in applying accounting policies that have the most significant effect on the
amount recognised in the financial statements are the measurement and impairment of intangible assets.
Business Combination
On 27 September 2019, the Group entered into an agreement to acquire certain assets of Power Line Technology
Inc. (“PLT”) for $5,318,000 (“Acquisition”). PLT’s flagship product, Pole Foreman, is a leading pole loading analysis
software solution used in the North American market. This is a strategically important extension of the IKE Analyse
platform. This acquisition provides opportunities for the Group to lever PLT’s technology for further growth. The
acquisition is profitable and is immediately cash flow accretive.
The Acquisition price of $5,318,000 includes an initial consideration which comprises $2,749,000 of cash and
$1,155,000 of IKE shares issued at $0.60 per share in equal tranches over a three-year period. Separately, the
Group assumed the balance remaining of PLT’s maintenance performance obligations for cash consideration
totalling $157,000.
54
Financial Statements 2. Basis of preparation (cont.)
The remaining $1,414,000 earn out component will be paid as 70% cash and 30% scrip across all components.
The earn out will be paid annually over a three-year period subject to the founder remaining employed at ikeGPS
Inc, and IKE shares issued under the earn out will also be issued at $0.60 per share.
The Acquisition was funded through the issuance of IKE shares to PLT combined with cash payments.
The purchase consideration was allocated to the acquired assets based on their estimated fair values as at the
date of acquisition,
Purchase consideration
Cash paid
IKE shares
Total purchase consideration
Fair value of net assets acquired on 18 October 2019
Intangible assets
Pole Forman pole loading software solution
Customer contracts and relationships
Training materials
Maintenance performance obligations
Total net assets acquired
$'000's
2,592
1,155
3,747
$'000's
3,395
303
206
(157)
3,747
A fair value assessment was performed on each intangible asset identified, the combined fair value supporting
the total consideration paid. Management assessed that no indicators of impairment were noted at the end of the
financial year and therefore no impairment test was conducted.
During the current financial year, the Group recorded Revenue of $402,000 related to the Pole Forman and Training
business unit. If the acquisition had occurred on 1 April 2019, the revenue and net loss after tax for the Group
would have been approximately $10,326,000 and ($6,201,000) respectively.
3. New and amended standards adopted by the Group
NZ IFRS 16 Leases
Under NZ IFRS 16, a contract is, or contains, a lease if the contract conveys the right to control the use of an
identified asset for a period of time in exchange for consideration. Under NZ IAS 17, a lessee was required to
make a distinction between a finance lease (on the balance sheet) and an operating lease (off balance sheet).
NZ IFRS 16 now requires a lessee to recognise a lease liability reflecting future lease payments and a ‘right-to-use
asset’ for most lease contracts.
Impact of adoption
The Group has adopted NZ IFRS 16 from 1 April 2019 using the simplified transition approach. Under this
approach the cumulative effect of initially applying NZ IFRS 16 is recognised as an adjustment to retained
earnings as at 1 April 2019. Comparative figures are not restated but instead continue to reflect the accounting
policies under NZ IAS 17 leases.
On adoption of NZ IFRS 16, the Group recognised lease liabilities in relation to leases which had previously been
classified as operating leases. The liabilities are measured at the present value of the remaining lease payments,
discounted using the ‘incremental borrowing rate’ as of 1 April 2019. The Group’s incremental borrowing rate
applied to the lease liabilities on 1 April 2019 is 5.50%.
55
Financial Statements 3. New and amended standards adopted by the Group (cont.)
Adjustments recognised on adoption of NZ IFRS 16:
The impact on the Group's balance sheet as at 1 April 2019
Dr Lease asset
Dr Retained earnings
Cr Lease liabilities
The impact on the Group's retained earnings as at 1 April 2019
Closing retained earnings 31 March 2019
NZ IFRS 16 cumulative effect
$'000's
367
45
412
$'000's
(45,846)
(45)
(45,891)
A reconciliation of operating lease commitments at 31 March 2019 to the lease liability recognised at 1 April 2019
is shown below:
Operating lease commitments disclosed at 31 March 2019
Discounted using the lessee's incremental borrowing rate at the date of initial application
Leases not included under NZ IFRS 16
Different treatment of operating lease expense
Lease Liability Recognised as at 1 April 2019
Classified as:
Less than one year
One to five years
Lease liabilities recognised as at 1 April 2019
$'000's
928
(76)
(71)
(369)
412
86
326
412
Judgements and practical expedients used
On transition and during the year the Group has applied the practical expedient provided by the new standard to
treat any lease with a term less than 12 months as a short-term lease and therefore recognise the lease payments
on a straight-line basis over the term of the lease.
The Group has also applied the practical expedient allowing low value lease to be recognised on a straight-line
basis over the term of the lease.
Leases are in relation to office space and carparks in both Broomfield and Wellington. The Group has applied an
incremental borrowing rate of 5.50% on all lease liabilities entered during the year.
Lease Liabilities
Lease liabilities recorded on the balance sheet.
Balance at 1 April 2019
Additions due to first-time adoption of IFRS 16
Additions during the year
Payments made
Interest charges
Balance at 31 March 2020
56
$'000's
-
412
506
(161)
30
787
Financial Statements 3. New and amended standards adopted by the Group (cont.)
The maturity of the lease liabilities is as follows:
Lease liabilities as at 31 March 2020
Less than one year
One to five years
Lease liabilities recognised as at 31 March 2020
Lease Assets
Lease assets are recorded on the balance sheet.
Balance at 1 April 2019
Additions due to first-time adoption of IFRS 16
Additions during the year
Depreciation charges
Balance at 31 March 2020
4. Significant accounting policies
Basis of consolidation
Subsidiaries
$'000's
327
460
787
$'000's
-
367
510
(172)
705
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an
entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has
the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the
date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.
Transactions eliminated on consolidation
Intra-Group transactions, balances, and any unrealised gains arising from intra-Group transactions, are eliminated
in preparing the consolidated financial statements. Unrealised losses are eliminated in the same way as
unrealised gains, but only to the extent that there is no evidence of impairment.
Foreign currency translation
Functional and presentation currency
Items included in the financial statements of each of the Group’s subsidiaries are measured using the currency of
the primary economic environment in which the entity operates ("the functional currency").
The functional currency of the Company is NZ dollars. The functional currency of the Group's USA subsidiary is US
dollars. These financial statements are presented in NZ dollars, which is the Group's presentation currency.
Transactions and balances
Foreign currency transactions are initially translated to functional currencies at the rates of exchange prevailing
at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such
transactions and from the revaluation at year-end exchange rates of monetary assets and liabilities denominated
in foreign currencies are recognised in profit or loss.
57
Financial Statements 4. Significant accounting policies (cont.)
Group companies
The results and financial position of the US
subsidiary are translated into the presentation
currency as follows:
Any gain or loss arising on derecognition is recognised
directly in profit or loss and presented in other gains/
(losses) together with foreign exchange gains and
losses. Impairment losses are presented as separate
line item in the statement of profit or loss.
Cash and cash equivalents
assets and liabilities are translated at the closing rate at the
date of the balance sheet;
Cash and cash equivalents comprise cash balances
and call deposits.
Trade and other receivables
Trade and other receivables arise when the Group
provides money, goods and services directly to a
debtor with no intention of selling the receivable.
They are included in current assets, except for those
with maturities greater than 12 months after the end
of the reporting period which are classified as non-
current assets.
They are recognised initially at their fair value and
subsequently measured at amortised cost using the
effective interest method.
Lease assets and liabilities
Lease assets are contracts which convey the right
to use office space in both Colorado and Wellington.
Lease assets are recognised at the present value of the
lease payments that are not paid at the inception of the
lease. Subsequent to initial recognition the lease asset
is recorded at the amount initially recognised less
amortisation and impairment.
The corresponding lease liability to the lessor is
included in the balance sheet as a lease liability.
Lease payments are apportioned between finance
charges and a reduction in the lease liability. The
finance charges and amortisation of the lease
asset are charged directly to the Statement of
Comprehensive Income.
Trade and other payables
Trade and other payables are obligations to pay for
goods and services that have been acquired in the
ordinary course of business from suppliers. Accounts
payable are classified as current liabilities if payment
is due within one year or less (or in the normal
operating cycle of the business if longer). If not, they
are presented as non-current liabilities. They are
recognised initially at their fair value and subsequently
measured at amortised cost using the effective
interest method.
+
+
income and expenses are translated at average exchange rates
(unless this average is not a reasonable approximation of the
cumulative effect of the rates prevailing on the transaction
dates, in which case income and expenses are translated at the
dates of the transactions); and
+
all resulting exchange differences are recognised in other
comprehensive income.
When a foreign operation is sold, such exchange
differences are reclassified to profit or loss in the
consolidated statement of profit or loss and other
comprehensive income.
Goods and Services Tax
All amounts are shown exclusive of Goods and
Services Tax (GST) and other indirect taxes except for
trade receivables and trade payables that are stated
inclusive of GST.
Financial Instruments
Financial assets and liabilities are recognised on
the Group’s statement of financial position when the
Group becomes a party to the contractual provisions
of the instrument.
They include trade and other receivables, trade and
other payables, cash and cash equivalents. They
are included in current assets and current liabilities,
except for loans and receivables greater than 12
months which are included in non-current assets.
The group classifies its financial assets and liabilities
as ‘measured at amortised cost’ or fair value through
profit or loss at initial recognition.
Amortised cost assets that are held for collection
of contractual cash flows where those cash flows
represent solely payments of principal and interest are
measured at amortised cost.
Interest income from these financial assets is
included in finance income using the effective interest
rate method.
58
Financial Statements 4. Significant accounting policies (cont.)
Property, plant and equipment
Recognition and measurement
Items of property, plant and equipment are
measured at cost less accumulated depreciation and
impairment losses.
Cost includes expenditures that are directly
attributable to the acquisition of the asset.
Depreciation
Depreciation is recognised in profit or loss on a
straight-line basis over the estimated useful lives of
each part of an item of property, plant and equipment.
Depreciation methods, useful lives and residual values
are reviewed and adjusted, if appropriate, at each
reporting date.
Office furniture and equipment
Plant and equipment
IKE rental devices
IT equipment
20% - 33%
20% - 50%
30%
33% - 50%
Gain and losses on disposals are determined by
comparing proceeds with the carrying amount. These
are included in profit or loss.
Intangible assets
Research and development
All research costs are recognised as an expense when
they are incurred.
Capitalised development costs
The Group capitalises employee and consultants’
costs directly related to development. The Group
regularly reviews (at least annually) the carrying value
of capitalised development costs to ensure they are
not impaired. Management has reviewed the expected
remaining useful life of assets and concluded that the
development costs for all products are amortised over
periods of 4 to 10 years to reflect the expected useful
life of the assets.
Development costs that are directly attributable to the
design and testing of identifiable and unique software
products controlled by the Group are recognised as
intangible assets when the following criteria are met:
+
it is technically feasible to complete the software product so that
it will be available for use;
+ management intends to complete the software product and use
or sell it;
+
+
+
+
there is an ability to use or sell the software product;
it can be demonstrated how the software product will generate
probable future economic benefits;
adequate technical, financial and other resources to complete
the development and to use or sell the software product are
available; and
the expenditure attributable to the software product during its
development can be reliably measured.
Other development expenditures that do not meet
these criteria are recognised as an expense as
incurred. Development costs previously recognised
as an expense are not recognised as an asset in a
subsequent period.
Impairment of non-financial assets
Intangible assets under development are not subject to
amortisation and are tested annually for impairment, or
more frequently if events or changes in circumstances
indicate that they might be impaired. The carrying
amount of the Group’s other assets are reviewed at
each balance date to determine whether there is any
indication of impairment or objective evidence of
impairment. If any such indication exists, the assets
recoverable amount is estimated.
Recoverable amount is the higher of fair value less
costs to sell and value in use. In assessing value in
use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate
that reflects current market assessments for the
time value of money and the risks specific to the
asset for which estimates of future cash flows have
not been adjusted. If the recoverable amount of an
asset (or cash generating unit) is estimated to be
less than its carrying amount, the carrying amount
of the asset (cash generating unit) is reduced to its
recoverable amount. An impairment loss is recognised
in profit or loss immediately. Where an impairment
loss subsequently reverses, the carrying amount of
the asset (cash generating unit) is increased to the
revised estimate of its recoverable amount, but only
to the extent that the increased carrying amount does
not exceed the carrying amount that would have been
determined had no impairment loss been recognised
for the asset (cash generating unit) in prior years. A
reversal of an impairment loss is recognised in profit or
loss immediately.
59
Financial Statements 4. Significant accounting policies (cont.)
Employee benefits
Impairment of financial assets
From 1 April 2019 the Group assesses impairment
on a forward-looking basis, the expected credit loss
associated with its financial assets carried at amortised
cost. The Group will assess if there has been a
significant increase in credit risk by assessing market
conditions, forward looking estimates and previous
financial history of counterparts.
For trade receivables the Group applies the simplified
approach permitted by NZ IFRS 9, which requires
expected lifetime losses to be recognised from initial
recognition of the receivables.
The expected credit losses on these financial assets
are assessed using a provision matrix, adjusted for
factors that are specific to the receivables including
customers historical credit loss experience, individual
customer characteristics, customer market segment
and economic environment.
The Group writes off a financial asset when there
is information indicating default or delinquency in
payments, the probability that they will enter bankruptcy,
liquidation or other financial reorganisation and there is
no real prospect of recovery.
Inventory
Inventories are measured at the lower of cost and net
realisable value. The cost of inventories is based on
a weighted average cost, and includes expenditure
incurred in acquiring the inventories and bringing them
to their existing location and condition. Cost comprises
direct materials, direct labour and production overhead.
Net realisable value is the estimated selling price in the
ordinary course of business less the estimated costs
of completion and the estimated costs necessary to
make the sale.
Government grants
Government grants are recognised at their fair value
where there is reasonable assurance that the grants
will be received, and all attaching conditions will be
complied with.
When the grant relates to an expense item, it is
recognised as income on a systematic basis over the
periods necessary to match the grant to the costs that it
is intended to compensate.
Liabilities for wages and salaries, including non-
monetary benefits and accumulating sick leave that
are expected to be settled wholly within 12 months
after the end of the period in which the employees
render the related service are recognised in respect
of employees’ services up to the end of the reporting
period and are measured at the amounts expected to
be paid when the liabilities are settled. The liabilities
are presented as current employee benefit obligations
in the consolidated balance sheet.
The Group recognises a liability and an expense for
bonuses where contractually obliged or where there
is a past practice that has created a constructive
obligation.
For defined contribution plans, the group pays
contributions to publicly or privately administered
pension insurance plans on a mandatory, contractual
or voluntary basis. The group has no further payment
obligations once the contributions have been paid.
The contributions are recognised as employee benefit
expense when they are due. Prepaid contributions
are recognised as an asset to the extent that a
cash refund or a reduction in the future payments
is available.
Other liabilities
The Group recognises a liability when there is a
present obligation as a result of a past event (see note
2). During the year, the Group acquired certain assets
in Powerline Technology Inc. As part of the acquisition
the Group is obligated to make instalments of both IKE
shares and cash. This obligation includes two parts;
remaining shares to be issued as part of the initial
consideration, and cash accrued subject to the terms
of service of a key employee. The component subject
to continued service is accrued on a straight-line basis
over the required term of service. Other liabilities are
recognised at fair value.
Share-based payment
The Group operates an employee option scheme
(equity-settled) under which employees receive the
option to acquire shares at a predetermined exercise
price. The options are measured at fair value at grant
date using the Black Scholes model with the fair value
recognised as an employee benefit expense in profit or
loss with a corresponding increase in equity. The total
expense is recognised over the vesting period, which
is the period over which all of the specified vesting
conditions are to be satisfied. At the end of each
period, the Group revises its estimate of the number of
options that are expected to vest based on the service
conditions. It recognises the impact of the revision to
60
Financial Statements 4. Significant accounting policies (cont.)
original estimates, if any, in share-based payment
reserve with a corresponding change to share based
compensation reserve in equity.
In addition to the option scheme, the Group will make
share-based payments as contractually obligated
as part of the business combination entered into
during the year.
Revenue
The Group derives its revenue from the sale of product
and related services, subscription revenue, software
licenses and end to end technical pole data analysis.
Revenue is recognised when performance obligations
have been satisfied. A performance obligation has
been satisfied when control of the good or service
associated with the performance obligation has been
transferred to the customer. Refer to ‘note 6’.
Sale of product
Revenue from the sale of product is derived from
the sale of the Group’s laser measurement devices,
associated software and accessories. Revenue is
recognised when the products are shipped to the
customer being the point at which control is considered
to have transferred to the customer.
IKE rental revenue
IKE rental revenue is derived from fees charged to
customer on a monthly basis for the use of an IKE unit
and for access to IKE Field and Office.
Leases of the IKE unit are considered operating leases
as the Group retains the significant portion of the risks
and rewards of ownership. Rental payments received
(net of any incentives) are recognised as lease revenue
in profit or loss on a straight-line basis over the period
of the lease.
Subscription revenue for access to IKE Field and Office
is recognised in accordance with the policy below on
subscription revenue.
Subscription revenue
Subscription revenue is recognised as the services are
provided to the customers. Consideration received in
advance (of the service being provided), is recognised
in the balance sheet as deferred income.
IKE Analyze solution revenue
IKE Solution revenue is derived from our end to
end pole and wire analysis solution. The complete
solution offering provides mobile field devices to
capture data, software to support the collection of
fast standardised data, completion of pole annotation
analysis, completion of pole loading analysis and
performing make ready engineering analysis. Revenue
is recognised when the data has been analysed and
the customer requirements outlined in the engagement
statement of work have been completed.
Pole loading software license and services
Revenue is derived from selling a software program for
performing structure analysis of utility poles. Revenue
is recognised when the software is transferred to the
customer or when any initial configuration and training
service is provided.
Pole loading maintenance and support
subscription
Revenue is derived from providing customers with
an annual subscription to received software updates,
maintenance and ongoing support for the software.
Revenue is recognised over the period in which the
service is available to customers.
Other operating revenue
Other operating revenue includes consulting, unit
repairs and training revenue. Revenue is recognised
when the services are performed.
Consideration received prior to the service being
provided is recognised in the balance sheet as
deferred revenue.
Finance income and expenses
Interest income is recognised as it accrues, using the
effective interest method. Finance expenses comprise
interest expense on borrowings, recognised using the
effective interest method.
Current and deferred income tax
The current income tax charge is calculated on
the basis of the tax laws enacted or substantively
enacted at the balance sheet date in the countries
where the Company and its subsidiaries operate and
generate taxable income. Management periodically
evaluates positions taken in tax returns with respect to
situations in which applicable tax regulation is subject
to interpretation. It establishes provisions where
appropriate on the basis of amounts expected to be
paid to the tax authorities.
Deferred income tax is recognised on temporary
differences arising between the tax bases of assets
and liabilities and their carrying amounts in the
consolidated financial statements.
61
Financial Statements 4. Significant accounting policies (cont.)
5. Operating segments
Deferred income tax is determined using tax rates (and
laws) that have been enacted or substantively enacted
by the balance sheet date and are expected to apply
when the related deferred income tax asset is realised,
or the deferred income tax liability is settled.
Deferred income tax assets are recognised only to the
extent that it is probable that future taxable profit will be
available against which the temporary differences can
be utilised.
The CEO and senior management team are the Group’s
operating decision makers. During FY20 the Group’s
selling activities were focused and organised into two
customer segments namely Utility & Communications
and Other Business. The Utility & Communications
segment includes sales to companies involved in the
broadband fiber and cellular 5G roll out in the United
States. Other Business includes sales of Spike into the
Signage, Architecture Engineering and Construction
(AEC) and Geospatial markets.
Current and deferred tax is recognised in profit or loss,
except to the extent that it relates to items recognised in
other comprehensive income or directly in equity. In this
case, the tax is also recognised in other comprehensive
income or directly in equity, respectively.
Within the Utilities & Communications segment the
Group sold the IKE device, corresponding annual
subscription revenue and IKE anlayze transactions
being an end to end technical solution to customers
performing make ready engineering (MRE) projects.
As part of the business combination with Powerline
Technology Inc, the Group offered pole loading
software licenses including ongoing annual
subscriptions for maintenance and support into
this segment.
The segment reporting format reflects the Group’s
management and internal reporting structure.
Contribution is after allocating cost of goods sold.
Reporting of overheads and balance sheet position
is not undertaken at a level lower than the Group
as a whole. Geographically, revenue is substantially
generated in the United States.
Earnings per share
The Group presents earnings per share (“EPS”) data for
its ordinary shares.
Basic EPS is calculated by dividing the profit or loss
attributable to ordinary shareholders of the Company
by the weighted average number of ordinary shares
outstanding during the year.
Diluted EPS is determined by adjusting the profit or loss
attributable to ordinary shareholders and the weighted
average number of shares that would be issued on
conversion of all of the dilutive potential ordinary shares
into ordinary shares.
Other reserves
Share-based payments reserve
The share-based payments reserve is used to recognise
both the grant date fair value of options issued to
employees but not exercised and contractual share
payments to be made to employees based on the period
of employment.
Foreign currency translation reserve
Exchange differences arising on translation of the
foreign controlled entity are recognised in other
comprehensive income as described in the foreign
currency translation accounting policy and accumulated
in a separate reserve within equity. The cumulative
amount is reclassified to profit or loss when the net
investment is disposed of.
62
Financial Statements Operating segments (cont.)
2020
2019
Utility &
Communication
Other
Business
Group
Utility &
Communication
Other
Business
Group
$'000's
$'000's
$'000's
$'000's
$'000's
$'000's
Sale of product and services (Point in Time)
IKE rental (Point in Time)
Subscription (Over time)
Contribution
IKE Analyze solution (Point in Time)
Contribution
Pole loading software licenses, services and
subscriptions (Point in time & Over time)
Contribution
Gross Profit
Sales and marketing costs
Other corporate income and expenses
Net loss before tax
6. Revenue and expenses
Revenue
Sale of product
IKE rental
IKE Solution
IKE Subscription
Pole loading licence and subscription
Services
Operating revenue
Government grants
Total revenue and other income
3,587
466
1,825
4,228
1,441
547
-
-
640
-
36
575
-
-
-
-
2,250
491
2,810
4,304
3,244
1,854
402
402
591
-
50
400
-
-
-
-
2,841
491
2,860
4,704
3,244
1,854
402
402
6,960
(4,697)
(7,951)
(5,688)
2020
$'000's
2,653
491
3,244
2,860
402
188
9,838
1
9,839
4,227
466
1,862
4,803
1,441
547
-
-
5,350
(3,226)
(7,216)
(5,092)
2019
$'000's
4,058
466
1,441
1,862
-
169
7,996
102
8,098
In the current year, no customer within a particular operating segment represented more than 10% of revenue
(FY19: no customers).
63
Financial Statements 6. Revenue and expense (cont.)
Reconciliation of deferred income balances
Opening deferred income balance
Revenue recognised that was included in deferred income at the beginning of the period
Decrease on adoption of IFRS 15
Subscription revenue recognised
New Zealand wage subsidy
Unsatisfied performance obligations for the current year
Closing deferred income balance
2020
$'000's
1,301
-
(1,230)
81
2,295
2,447
2019
$'000's
1,205
(274)
(861)
-
1,231
1,301
Revenue recognition
Revenue is recognised using the five-step model to account for revenue arising from contracts with customers.
Under NZ IFRS 15, revenue is recognised at an amount that reflects the consideration to which an entity expects
to be entitled in exchange for transferring goods or services to a customer.
The standard requires entities to exercise judgement, taking into consideration all of the relevant facts and
circumstances when applying each step of the model to contracts with their customers. The five-step model for
recognising revenue from contracts with customers requires consideration of the following steps:
+
+
Identifying the contract
Identifying the individual performance obligations within the contract
+ Determining the transaction price
+ Allocating the transaction price to distinct performance obligations
+ Recognising revenue
We have provided the table below that provides the key judgements made on the application of NZ IFRS 15 across
each revenue type with standardised terms and conditions. The Group has applied a practical expedient permitted
by the standard; therefore, no significant financing component exists on deferred income.
Other Business
Revenue Type
Hardware Device
Description
Key Judgements
ikeGPS sells Spike devices
through direct orders and
online software.
No major judgement
required.
Outcome
N/A
Timing of revenue recognition
Point in time
Recognised when the unit is
received by the customer.
64
Financial Statements 6. Revenue and expenses (cont.)
Utility & Communication
Revenue Type
Description
Key Judgements
Outcome
IKE Solution
Subscription
IKE Analyze
Solution
The IKE Solution is
marketed to the utility &
communications market
as an all-in-one package
which includes the IKE4
device, preconfigured
IKE Field Android mobile
application and online
access to IKE Office - a
cloud-based software
platform that enables
customers to measure and
analyse assets captured
with the IKE device
Customers are required
to renew software
subscriptions to allow
continued access to the
IKE Office online cloud
functionality and the
ability to customise and
add new forms onto the
IKE4 device.
Providing an end to end
technical solution for
customers; performing
pole loading analysis and
make ready engineering
assessments.
The contract for an IKE Device, IKE
Field and IKE Office is generally
sold as a packaged solution.
Management has determined the
individual performance obligations
within the contract. The total
contract price is allocated to
each performance obligation.
Where possible management
uses external comparatives to
identify standalone performance
obligations and respective price.
Where an external comparative
is not available, management’s
judgement was applied.
Determining when each
performance obligation is fulfilled.
Determining when each
performance obligation is fulfilled.
Initially the customer performs
data collection, the customer also
receives an annual subscription to
access IKE Field and Office.
Once customer data is collected it
is uploaded into IKE Office where
IKE performs the analysis and
completes requested reports.
Timing of revenue
recognition
Point in time
Both the IKE device
and IKE Field mobile
application are
recognised at the point
in time when the device
is sent to the customer.
Over time
IKE Office is recognised
over the term of the
contract.
Over time
Subscription software
recognised over time
Management has determined that
the IKE Device, Software licence (IKE
Field) and Subscription (IKE Office)
are distinct performance obligations
of the IKE Solution. In determining
this management has relied on
market comparables to establish
standalone performance obligations.
Customers use the IKE Field and IKE
Office solution to store and analyse
data, customise and add new forms.
Along with integration capability
these performance obligations can be
described as ‘stand ready’ services
which can be recognised over time.
The business is required to perform
certain activities as per the scoping
document for each customer. Once
the activity is complete the Group will
recognise the revenue.
Point in time
Each transaction
(completed record) is
recognised when the
performance obligation
has been completed.
Pole loading
software license
IKE sells a license of it’s
pole loading software to
customers.
Management has determined the
individual performance obligations
of the contract. The total
contractual price allocated to each
performance obligation using the
stand alone selling price.
Management has determined that
the perpetual license and first year
of maintenance and support are
separate performance obligations.
IKE has used the stand alone selling
price to allocate the contractual price.
Point in time
The pole loading
software license is
recognised at the
point in time when the
software is transferred.
Over time
The annual maintenance
and support is
recognised over the first
year.
Pole loading
maintenance
and support
subscription
Ongoing software support,
maintenance and software
updates through an annual
subscription.
Determining when each
performance obligation is fulfilled.
Customers use the maintenance
and support to have the latest pole
loading software and calculations
available. These performance
obligations occur at any time during
the subscription period.
Over time
Pole loading software
maintenance and
support are recognised
over time.
65
Financial Statements 6. Revenue and expenses (cont.)
Government grants are in relation to cost subsidies from Callaghan Innovation for research and development and
the New Zealand Covid-19 wage subsidy.
Operating expenses
Operating expenses consist of operations costs, sales and marketing expenses, engineering and research
expenses and corporate expenses.
Operating expenses
Audit of financial statements
Audit and review of financial statements
Other services
Other assurance services1.
Tax compliance services
Total other services
Total fees paid to auditor
Amortisation of development asset
Amortisation of patents and software
Depreciation
Total amortisation and depreciation2.
Employee benefit expense
Share-based payment
External contractors and consultants
Employee benefit expense capitalised3.
Operating lease expenses4.
Direct selling and marketing5.
Impairment of assets6.
Credit loss provision and write off expense
Other operating expenses7.
Total operating expenses
Notes
2020
$'000's
2019
$'000's
155
6
-
6
161
936
-
287
1,223
6,623
380
644
(683)
180
836
1,100
317
1,851
12,632
141
6
20
26
167
975
-
117
1,092
6,158
188
360
(603)
370
1,160
-
26
1,604
10,522
1. Other assurance services comprise the review of Callaghan Innovation research and development grant claims.
2. All of amortisation and $115,000 (2019: $117,000) of depreciation are included in engineering and research expenses, $172,000
related to lease assets under NZ IFRS 16 is included in corporate costs. The balance of depreciation totalling to $395,000 is included
in cost of sales (2019: $248,000).
3. Relates to employee benefit expense, external contractors and consultants’ expenses that are directly attributable to the development
of intangible assets and have been capitalised.
4. Relates to short term leases and common area maintenance costs. In FY19, it included operating lease payments now recorded as
lease liabilities as per NZ IFRS 16.
5. Selling and marketing expenses includes expenses incurred mainly in relation to promotional activities which include,commissions
and other direct marketing expenses.
6.
Impairment includes intangible assets of Spike and SDK.
7. Other operating expenses include corporate advisory, travel, engineering expenses, facilities and IT expenses.
66
Financial Statements 7. Cash and cash equivalents
Cash at bank
Call / term deposits
Total
2020
$'000's
3,827
500
4,327
2019
$'000's
1,675
1,800
3,475
An overdraft facility of NZ$250,000 is in place with BNZ. BNZ has perfected security interest in all present and
after acquired property of ikeGPS Limited. On the BNZ facility there is an outstanding guarantee to another
party of $75,000.
8. Inventory
Finished goods
Components
Total inventory
2020
$'000's
764
646
1,410
2019
$'000's
777
914
1,691
Included in cost of sales is $995,695 (2019: $1,139,000) relating to the amount of inventory recognised as an
expense in the year. During the year Spike raw materials valuing $146,545 have been written down as an expense
through cost of sales.
9. Trade and other receivables
Trade receivables
GST receivable
Grants receivable
Other receivables
2020
$'000's
1,499
72
-
5
2019
$'000's
1,268
45
46
11
Total trade and other receivables
1,576
1,370
The Group has $887,183 of trade receivables past due but not impaired at 31 March 2020. (2019: $791,988)
30 – 90 days
90 days +
Total past due
669,583
217,600
887,183
Trade receivables is net of provision for doubtful debts of $328,605 (2019: $17,559).
67
Financial Statements 10. Trade and other payables
Trade payables
Other payables
Accrued expenses
Total trade and other payables
11. Subsidiaries
Name of entity
Country of incorporation
Principal activity
ikeGPS Limited
New Zealand
Product development and business operations
ikeGPS Inc.
USA
Business operations
2020
$'000's
469
292
170
931
2020
1,000
1,000
2,000
2019
$'000's
252
-
253
505
2019
1,000
1,000
2,000
ikeGPS Limited and ikeGPS Inc. are 100% (2019: 100%) owned by the Company. All subsidiaries have 31 March
balance dates.
12. Current and deferred tax
The Group’s tax expense/ (benefit) comprises:
Deferred tax
Income tax expense /(credit)
2020
$'000's
17
17
2019
$'000's
(4)
(4)
Prima facie income tax expense on pre-tax accounting loss from operations reconciles to the accounting loss
from operations and reconciles to the income tax expense/(credit) in the financial statements as follows:
2020
$'000's
(5,688)
(1,593)
117
(24)
1,517
17
2019
$'000's
(5,092)
(1,425)
198
-
1,223
(4)
Net loss before income tax
Prima facie income tax credit at 28%
Non-deductible expenses
Deferred tax on temporary differneces
Unrecorded tax losses
Income tax expense /(credit)
68
Financial Statements 12. Current and deferred tax (cont.)
The New Zealand Group has unrecognised tax losses of $14,793,000 (2019: $16,954,000), available for use
against future taxable profits subject to meeting the requirements of continuous shareholder continuity provisions
as stated in the Income Tax Act 2007. The FY19 available tax losses carried forward have reduced by $3,763,000,
relating to shareholder continuity. A tax asset in respect of these losses has not been recognised due to the
uncertainty of when the unused tax losses can be utilised.
Deferred tax opening balance
Temporary differences
Employee entitlements and provisions
Deferred research and development
IFRS 16 Leases
Intangible assets
Deferred tax closing balance
13. Contributed equity
Share capital
On issue at beginning of year
Issued under share placement
Issued under share purchase plan
Less listing costs offset against issue proceeds
Exercise of share options
Issued as part of business combination
Total share capital
Share capital on issue
Fully paid total shares at beginning of year
New ordinary shares offered
Ordinary shares issued on settlement of options
Ordinary shares issued as part of business combination
Fully paid ordinary shares
2020
$'000's
17
2
24
1
(44)
-
2020
$'000's
55,132
5,306
1,194
(560)
37
389
2019
$'000's
13
4
-
-
-
17
2019
$'000's
49,263
5,000
1,250
(381)
-
-
61,498
55,132
2020
2019
90,469,567
78,450,255
10,833,333
12,019,312
242,134
649,014
-
-
102,194,048
90,469,567
69
Financial Statements 14. Property, plant and equipment
Plant &
equipment
IKE rental
devices
Leasehold
improvements
Office furniture &
equipment
Development
equipment
Total
$'000's
$'000's
$'000's
$'000's
$'000's
$'000's
1,219
-
-
1,219
1,219
-
-
1,219
477
242
-
-
719
719
241
-
-
960
500
259
-
183
-
183
183
587
(115)
62
717
-
11
-
-
11
11
116
(4)
10
133
172
584
28
-
-
28
28
-
-
-
28
28
-
-
-
28
28
-
-
-
28
-
-
581
287
(156)
712
712
194
(47)
75
934
486
105
-
(143)
448
448
153
(40)
36
597
264
337
10
10
(7)
13
13
-
-
-
13
5
7
-
(7)
5
5
-
-
-
1,838
480
(163)
2,155
2,155
781
(162)
137
2,911
996
365
-
(150)
1,211
1,211
510
(44)
46
5
1,723
8
8
944
1,188
Cost
Balance at 1 April 2018
Additions
Disposals
Balance at 31 March 2019
Balance at 1 April 2019
Additions
Disposals
Exchange differences
Balance at 31 March 2020
Depreciation
Balance at 1 April 2018
Depreciation for the year
Impairment
Disposals
Balance at 31 March 2019
Balance at 1 April 2019
Depreciation for the year
Disposals
Exchange differences
Balance at 31 March 2020
Carrying amounts
At 31 March 2019
At 31 March 2020
70
Financial Statements Balance at 1 April 2019
9,120
174
15. Intangible assets
Cost
Balance at 1 April 2018
Additions
Disposals
Balance at 31 March 2019
Additions
Disposals
Exchange differences
Balance at 31 March 2020
Amortisation and impairment losses
Balance at 1 April 2018
Amortisation for the year
Impairment
Disposals
Balance at 1 April 2019
Amortisation for the year
Impairment
Disposals
Exchange differences
Balance at 31 March 2020
Carrying amounts
At 31 March 2019
At 31 March 2020
Development
assets
Patents
Software
Customer contracts &
relationships
Training
materials
$'000's
$'000's
$'000's
$'000's
$'000's
8,469
651
-
9,120
174
-
-
174
683
-
121
-
-
-
3,395
-
208
9,924
174
3,603
4,541
975
-
-
174
-
-
-
5,516
706
1,100
-
12
174
-
-
-
-
7,334
174
183
-
-
-
-
-
-
-
-
-
-
-
181
-
-
2
-
-
-
-
-
303
-
18
321
-
-
-
-
-
-
38
-
-
-
38
-
-
-
-
-
206
-
13
219
-
-
-
-
-
-
11
-
-
-
11
3,604
2,590
-
-
-
3,420
-
283
-
208
Balance at 31 March 2019
5,516
174
Total
$'000's
8,643
651
-
9,294
9,294
4,587
-
360
14,241
4,715
975
-
-
5,690
5,690
936
1,100
-
14
7,740
3,604
6,501
71
Financial Statements
16. Financial instruments and financial risk management
Financial instruments
The Group’s principal financial instruments comprise cash balances, trade and other receivables, trade and other
payables and employee entitlements.
The following table shows the designation of the Group’s financial instruments:
Financial Assets at
amortised cost
Financial
liabilities at
amortised cost
Total carrying
value
Financial Assets
at amortised
cost
Financial
liabilities at
amortised cost
Total carrying
value
2020
$'000's
2019
$'000's
Financial assets
Cash and cash equivalents
Trade and other receivables
Total financial assets
Financial liabilities
Employee entitlements
Trade payables
Other payables
Accrued expenses
Lease liabilities
Other liabilities
Total financial liabilities
4,327
1,576
5,903
-
-
-
-
-
-
-
-
-
-
231
469
292
170
787
300
4,327
1,576
5,903
231
469
292
170
787
300
2,249
2,249
3,475
1,370
4,845
-
-
-
-
-
-
-
-
-
-
226
252
-
253
-
-
731
3,475
1,370
4,845
266
252
-
253
-
-
731
Financial risk factors
The main risks arising from the Group’s financial instruments are credit risk, liquidity risk, foreign currency
risk and interest rate risks which arise in the normal course of the Company and Group’s business. The Group
uses different methods to measure and manage different types of risks to which it is exposed. Liquidity risk is
monitored through the development of future rolling cash flow forecasts.
The impact of Covid-19 has caused a slowdown of activity across the market. However, the Group’s core
customers in the Communications and Utilities market have generally been deemed ‘critical’ in the US markets and
have continued to operate when safe to do so. The impact on the financial risk factors is unknown at this time.
Due to the uncertain trading outlook and slow down, the Group has monitored Government subsidies available
both in New Zealand and the U.S. At balance date the Group applied for the NZ Government wage subsidy and
received $82,000 just prior to balance date. Subsequent to balance date, the Group received $825,000 (see note
25) under the U.S. Federal Government CARES Act Paycheck Protection Program (PPP) via Silicon Valley Bank.
These funds will be used to mitigate the financial risk Covid-19 has on the Group.
72
Financial Statements 16. Financial instruments and financial risk management (cont.)
Credit risk
The Group’s exposure to credit risk arises from potential default of the counterparty, with a maximum exposure
equal to the carrying amount of these instruments. Financial instruments which potentially subject the Group to
credit risk principally consist of cash and cash equivalents, and trade and other receivables. All cash and cash
equivalents in New Zealand are held with high credit quality counterparties, being trading banks with "AA-" grade
or better credit ratings, and a Moody’s A3 rating in the USA. The Group does not require collateral or security from
its trade receivables. The Group performs credit checks and ageing analyses and monitoring of specific credit
allowances. The Group does not anticipate any material non-performance of those customers. The total impaired
trade receivables as at balance date is $328,605.
At balance date 79% (2019: 65%) of the Group’s cash and cash equivalents were with one bank. The Group will
continue to monitor the impact of Covid-19 on customers’ ability to pay outstanding receivable (refer note 2).
Maximum exposure to credit risk at balance date:
Cash at bank
Trade and other reveivables
Total
2020
$'000's
4,327
1,576
5,903
2019
$'000's
3,475
1,370
4,845
Liquidity risk
Liquidity risk is the risk that the Group cannot pay contractual liabilities as they fall due. Finance monitors rolling
forecasts of the Group’s liquidity requirements to ensure it has sufficient cash to meet operational needs. Such
forecasting takes into consideration the Group’s forward financing plans, commitments and the close monitoring
of any impact Covid-19 has on the business (refer note 2). Based on this the Group believes that it has sufficient
liquidity to meet its obligations as they fall due for the next 12 months.
The following table sets out the undiscounted cash flows for all financial liabilities of the Group:
Contractual
cash flows
6 months or
less
No stated maturity
Constractual cash
flows
6 months or less
No stated maturity
2020
$'000's
2019
$'000"s
Employee entitlements
Trade payables
Other payables
Accrued expenses
Other liabilities
Lease liabilities
231
469
292
170
300
787
-
469
203
170
166
180
231
-
-
-
-
-
Total financial liabilities
2,249
1,188
231
226
252
-
253
-
-
731
-
252
-
253
-
-
505
226
-
-
-
-
-
226
73
Financial Statements 16. Financial instruments and financial risk management (cont.)
Foreign currency risk management
The Group is exposed to foreign currency risk on its sales and a significant portion of its expenses that are
denominated in USD which is different to the Group’s presentation currency. The Group currently does not hedge
its exposures arising from its transactions denominated in a foreign currency.
At 31 March 2020, had the local currency strengthened / weakened against the USD by 10% the pre-tax loss would
have been (higher)/lower as follows:
Cash and cash equivalents
Trade and other receivables
Trade and other payables
Intercompany balance foreign
Carrying value of FX
impacted financial
instruments
+10%
-10%
$'000's
$'000's
$'000's
USD 2,093
USD 898
USD 164
USD 24,025
(316)
(135)
(42)
3,642
390
167
(109)
(4,451)
Interest rate risk management
The Group’s interest rate risk arises from its cash balances. The Group currently has no significant exposure to
interest rate risk other than in relation to the amount held at the bank. A reasonably expected movement in the
prevailing interest rate would not materially affect the Group’s financial statements.
17. Capital management
The capital structure of the Group consists of equity raised by the issue of ordinary shares in the Company. The
Group manages its capital to ensure the entities in the Group are able to continue as a going concern. The Group
is not subject to any externally imposed capital requirements.
In the current financial year, the Group completed a Private Placement and Share Purchase Plan raising $6.5m.
The Group’s aim is to maintain a sufficient capital base so as to maintain investor and creditor confidence and to
sustain future development of the business. The Group’s capital requirements are regularly reviewed by the Board
of Directors.
There have been no material changes in the Group’s management of capital from the previous year.
This note should be read in conjunction with note 2; Going Concern which outlines the material uncertainty
around the Group’s going concern assumption and the FY21 plan that Directors believe will enable the Group to
continue operations.
18. Fair value estimation
The fair value of the Group’s financial assets and liabilities does not materially differ from their carrying value.
19. Commitments and contingencies
Non-cancellable short-term leases or lease related costs
Less than one year
Between one and five years
Total
74
2020
$'000's
232
308
540
2019
$'000's
307
621
928
Financial Statements 19. Commitments and contingencies (cont.)
Operating leases are in relation to rented premises and photocopiers. This does not include leases accounted for
under IFRS 16.
The Group advises there are no contingencies.
20. Other liabilities
Less than one year
Accrued earn-out
Share based payment installment due in FY20
Between one and three years
Accrued earn-out
Share based payment installment due in FY21
Total other liabilities
All other liabilities are in relation to the business combination entered into during the year.
2020
$'000's
166
408
134
400
1,108
75
Financial Statements 21. Cash used in operations
Loss for the year
Less investment interest reveived
Non-cash items included in net loss
Depreciation
Amortisation of intangible assets
Asset impairment
Spike raw materials write-off
Debtor & Creditor write off
Deferred tax expense
Share based paymernt expense
Write off of obsolete materials, assets and IKE devices transferred to customers on rental close out
Foreign exchange (gains)/losses
Add/(less) movement in working capital items
Decrease/(Increase) in trade and other receivables
Decrease/(Increase) in inventories
Decrease/(Increase) in prepayments
Increase/(Decrease) in trade and other payables
Increase/(Decrease) in deferred income
Increase/(Decrease) in other liabilities
Increase/(Decrease) in employee entitlements
2020
$'000's
(5,705)
(12)
680
936
1,100
146
258
17
380
118
(5)
2019
$'000's
(5,088)
(31)
365
975
-
-
26
(4)
188
13
26
3,618
1,558
(524)
134
(390)
485
990
282
6
983
(65)
(470)
(22)
(182)
369
-
(135)
(505)
Net cash used in operating activities
(1,104)
(4,035)
22. Basic and diluted earnings per share
Total loss for the year attributable to the owners of the parent
Ordinary shares issued
Weighted average number of shares issued
Basic loss per share
2020
$'000's
(5,705)
2019
$'000's
(5,088)
102,194,048
90,469,567
95,950,183
85,332,541
$(0.06)
$(0.06)
The potential shares are anti-dilutive in nature. The diluted loss per share is therefore the same as the undiluted
EPS at ($0.06) and ($0.06) for the respective periods.
76
Financial Statements 23. Share based payments
Share based payments are in relation to both share options granted and contractual share payments to be made
to employees based on the period of employment.
Share based payment reserve
Share options
Share based payment on earn-out
Total
2020
$'000's
424
121
545
2019
$'000's
192
-
192
The contractual share based payments are in relation to the share instalments to be issued to the founder of PLT
subject to being employed by the Group (refer note 2).
Share options are granted to directors and selected employees to retain, reward and motivate such individuals to
contribute to the growth and profitability of the Group.
Options outstanding at 31 March 2020 have a contractual life from grant date of between 2.5 and 6 years. Options
can be exercised at any time after vesting and unexercised options expire at the end of the contract or if the
employee leaves the Group. The Group has no legal or constructive obligation to repurchase or settle the options
in cash. Any share to be issued on the exercise of the option will be issued on the same terms and will rank
equally in all respects with the ordinary shares in the company on issue.
Movements in the number of share options outstanding and their related average exercise prices are as follows:
At 1 April
Granted
Exercised
Forfeited
Expired
Average Exercise Price
Options (’000’s)
Average Exercise Price
Options (’000’s)
2020
2019
0.52
0.51
0.44
0.52
nil
$0.53
3,350
2,275
(567)
(273)
nil
4,785
$0.50
$0.55
-
$0.59
$0.66
$0.52
1,155
2,775
-
(50)
(530)
3,350
Out of the 4,785,000 outstanding options 2,867,923 (2019: 1,950,840) had vested and were exercisable at
31 March 2020.
77
Financial Statements 23. Share based payments (cont.)
Options outstanding
Share options outstanding at the end of the year have the following expiry date and exercise price.
Year Granted
Expiry Date
Exercise Price
Number of options
2020
2019
Term remaining
(years)
Number of options
Term remaining
(years)
2017
2017
2018
2018
2019
2020
2020
2020
2020
2020
30-Jun-20
31-Mar-21
31 Mar-21
31-Dec-21
31-Mar-25
31-Mar-25
31-Mar-25
31-Mar-25
30-Sep-25
$0.29
$0.54
$0.54
$0.64
$0.51
$0.51
$0.51
$0.51
$0.65
200,000
1,100,000
1,400,000
250,000
1,150,000
75,001
499,999
400,000
150,000
0.25
1.00
1.00
1.75
5.00
5.00
5.50
5.30
5.60
400,000
200,000
1,100,000
1,400,000
250,000
1.00
1.25
2.00
2.00
2.75
Measurement of fair value
The Company determined the fair value of options issued using the Black Scholes valuation model. The significant
inputs to the model were:
Fair value of options issued in the year
Weighted average share price
Exercise price
Volatility
Dividend yield
Risk free interest rate
24. Related parties
Short term benefits to directors and senior management
Share option expense directors and senior management
2020
2019
$0.16, $0.17, $0.49,$0.41
$0.11, $0.12, $0.13, $0.19
$0.51
$0.51 & $0.65
30%
Nil
$0.55
$0.54 - $0.64
30%
Nil
0.80% - 1.27%
1.79% - 2.15%
2020
$'000's
1,535
160
2019
$'000's
2,238
172
Key management are identified as the Chief Executive Officer, Chief Financial and Operating Officer and Directors.
Early in FY20 the Group made some changes to the key management Group. This involved reducing the number
of key management personnel to be the Group to the Chief Executive Officer and Chief Financial and Operating
Officer. In the comparative year key management included the Chief Technology Officer and SVP Utilities &
Communications who are no longer considered key management. FY19 benefits of those individuals were made
up of short term benefits of $607,012 and share option expenses of $12,236.
The Group issued 1,049,999 of unlisted share options at NZD$0.51 to Directors and key management during the
period in accordance with the ikeGPS Group Limited Employee Share Scheme.
In addition to the unlisted options issued, the Group net settled 270,841 unlisted options (187,503 exercisable
at NZD$0.40 and 83,338 exercisable at NZD$0.54) resulting in 86,695 new ordinary shares being issued to
key management.
78
Financial Statements 25. Subsequent events
On 1 May 2020 IKE received approximately $825,000 NZD under the U.S. Federal Government CARES Act
Paycheck Protection Program (PPP) via its bank, Silicon Valley Bank.
Under the PPP structure the loan principal amount is forgivable so long as the proceeds are used to cover
payroll costs, rent, and utility costs over the 8 week or 24 week period after the loan is made. Loan forgiveness
is contingent upon recipients requesting forgiveness, providing supporting documentation, and certifying
compliance to the forgiveness conditions as per the PPP legislation. Recipients would be responsible to repay any
amount of the loan that is not forgiven. The interest amount is 1% per annum.
79
Financial Statements ikeGPS Group Limited
Level 7, Willis Street
Te Aro
Wellington 6011
Telephone: +64 4 382 8064
Auditor
PricewaterhouseCoopers
PwC Centre 10 Waterloo Quay Pipitea,
Wellington 6011
Telephone: +64 4 462 7000
Directors of ikeGPS Group Limited
Share Registrar
Richard Gordon Maxwell Christie
Bruce Harker
Alex Knowles
Glenn Milnes
Frederick Lax
Bill Morrow
Mark Ratcliffe
Legal Advisers
Chapman Tripp
10 Customhouse Quay
PO Box 993
Wellington 6140
Telephone: +64 4 499 5999
Link Market Services Limited
PO Box 91976, Auckland 1142
Level 7 Zurich House
21 Queen Street, Auckland 1010
Telephone: +64 9 375 5998
Bankers
Bank of New Zealand
Harbour Quays, Ground Floor,
60, Waterloo Quay, Wellington 6011
Private Bag 39806,
Wellington Mail Centre,
Lower Hutt 5045
www.ikegps.com
80
Financial Statements 81